Used car prices are falling, but still higher than normal
Amid a shortage of semiconductors, a drop in new vehicle sales has led to less cars entering used lots in recent year — driving up prices.
The average cost of a used vehicle in the U.S. peaked at about $24,000 earlier this year. That’s more than $10,000 above the median price at the start of the COVID-19 pandemic in 2020.
But now prices are starting to drop.
Cox Automotive numbers say the cost of a used car or truck is down by about 15% nationwide, averaging around $20,000 for a vehicle with a previous owner. However, as CNBC reports, used vehicle prices remain 33% higher than where they’d be if normal depreciation occurred.
“The inventory is still not fully back to normal and we aren’t seeing a lot of leasing.” — Michelle Krebs, Cox Automotive
Michelle Krebs is a senior analyst for Cox Automotive. She says the drop in used prices has not yet translated to lower costs across the board.
“In contrast, new vehicle prices are climbing again, much of that due to the fact that luxury cars tend to sell in the end of the year,” Krebs explains.
According to Krebs, a catalyst for the drop in used vehicle costs is an increase in the number of vehicles available on used car lots. However, she warns prices might continue being high for the next couple of years.
“The inventory is still not fully back to normal and we aren’t seeing a lot of leasing,” Krebs says. “But it’s a much more normal market than the new vehicle market.”
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