Are Used Car Prices Finally Stabilizing?

[carmigo]

A small increase in used car prices may indicate stability.
For the first time this summer, the Manheim Used Vehicle Index saw a slight uptick. We also saw the number of used vehicles sold go up since October.

That doesn’t mean used car prices are about to go back up. But hopefully, we’ll see prices stabilize here through the holiday season. Heck, they might even go up a bit as holiday purchasing reduces overall availability.

USED CAR PRICES HAVE BEEN ON THE FALL IN RECENT MONTHS, BUT THE MANHEIM USED CAR INDEX SHOWS PRICES ARE STILL MUCH HIGHER COMPARED WITH PREVIOUS YEARS’ TRENDS.

Used Car Prices Stabilize as Activity Increases
At Carmigo, we haven’t seen much of an increase in the number of cars selling, but we have seen a marked increase in the number of offers being made to sellers.

We think this trend is due to increased demand from buyers, even if the sales haven’t gone up yet. This is because the prices sellers are expecting and the prices buyers are willing to pay haven’t quite evened out. Now that the prices have leveled out for a little while, buyers and sellers have time to adjust their expectations.

New Vehicle Inventory Reduces Used Car Demand
Part of the reason prices were so high leading up to this summer was the relatively low availability of new cars. Now that new car inventory has reached 2021 levels (according to ZeroSum Market), buyers are no longer turning to used cars out of necessity.

The silver lining in this ZeroSum report is a slight decrease in used car inventory, meaning prices shouldn’t continue to drop in the interim.

Fewer used cars available means higher prices for sellers, keeping used car prices stable in spite of increased new car inventory.

Used Car Prices are Still at Record Levels
Because we’ve seen such steady declines in used car prices over the past few months, many sellers have lost sight of the fact that prices are still much higher than at any point in the past decade.

Year on year, the Manheim Used Car Index (and used car prices/demand overall) has gone up or down a few points each year, with the overall trend being incremental growth. Up five points one year, down two points the next, and so on.

But in 2021, the index shot up from about 130 to 240.

So even though we’ve seen a 40-point decline in the last few months, the current index is still astronomically higher than it was this time two years ago.

What Do Used Car Prices Mean for You?
So what can you expect if you sell your car this winter? You can expect to make less than you would have this summer, but still much more than at any time in the history of used car sales.

Because the demand for used cars has gone down, dealerships only want to stock their lots with used cars that will sell quickly. That means cars like Accords, Camrys, F150s, and small crossovers like the Hyundai Santa Fe will attract more offers.

That doesn’t mean you can’t sell a larger SUV or luxury car this winter, you just may not see as much interest in more expensive models.

But people are always buying Jeeps, so they are less affected by market trends, which is why we aren't seeing as big of a drop in Jeep prices.

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[PW45]

Funny enough I was just looking around and thinking that prices were indeed falling. I remember doing a lot of comparisons when I got my Gladiator... Used were selling for as much if not more than new! I'm not seeing that right now.

 

[RidinDirty]

My last car loan was at 2.25% interest rate. Yeah, those days are gone (forever).

 

[carmigo]

Funny enough I was just looking around and thinking that prices were indeed falling. I remember doing a lot of comparisons when I got my Gladiator... Used were selling for as much if not more than new! I'm not seeing that right now.

You're spot on. This past summer was crazy for used car sales. It might have been because of all the supply chain and pandemic stuff. But now that things are getting back to normal-ish, used car prices are falling again. But that doesn't mean it's a lost cause to sell!

 

[carmigo]

My last car loan was at 2.25% interest rate. Yeah, those days are gone (forever).

Not bad! It was a wild time this past summer, and in regards to car sales we look back on it longingly.

 

[shimalkharia]

I’ve heard Hertz was able to make it back from bankruptcy. It might be connected to the price rise and stabilization. Generally, I think the used cars market will develop a lot in the following years because fewer people now want and can afford an expensive new car. People will not be ready to pay additionally just because the car is newly made.
That’s why marketplaces like https://www.jdmbuysell.com/buying-guide/nissan-silvia/ should get way more customers. It seems to be a good thing for the country in general because why constantly buy new cars if there are so many used ones that are still in good condition?

 

[carmigo]

I’ve heard Hertz was able to make it back from bankruptcy. It might be connected to the price rise and stabilization. Generally, I think the used cars market will develop a lot in the following years because fewer people now want and can afford an expensive new car. People will not be ready to pay additionally just because the car is newly made.

Huh! Interesting insight. Hopefully the following years see a better used car market, we hope at least.

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