Used car prices are falling.
“Everything is kind of coming down in terms of price,” said Karl Brauer, an executive analyst at iSeeCars.com. The company is an online car research resource and car search engine.
Used car prices fell 2% in November and 3% in December, according to a January report by iSeeCars.com
The car market has been on a rollercoaster since 2020.
“What we saw at the beginning of the pandemic, of course, was a complete drop in sales as everything shut down,” Brauer said. “Then once we got past those initial lockdown stages, there was a huge rush of people wanting to buy cars.”
However, supply chain issues impacting new car production coupled with high demand caused an increase in prices.
At first, most of the demand was for trucks and convertibles, but then it slowly became the entire car market, according to Brauer.
Used car prices went up 45% from June 2020 to June 2021, according to the Consumer Price Index.
“This was all due to a supply chain issue that kept new cars from being produced. The new and used car markets are closely tied together. If you can't buy a new car, your next option is to buy a used car,” said Brauer.
The drop in prices is due to a number of factors. Supply chain issues that we saw during the pandemic aren’t as bad. Demand is dropping off because of high interest rates on car loans and inflation. Experts say people are also more concerned about their expenses.
If you’re looking to buy a car, experts say now might be your time.
“If you’re thinking of buying a car and you've been on the sidelines for the past two years, the time for you to consider purchasing is probably moving up substantially now and in the next three to six months or even earlier if you really need a car, the prices should continue to come down,” said Brauer.
The average used car price was down more than $1,000 in December 2022, the first substantial drop in more than two years, according to a January report by iSeeCars.com.
A January report from Cox Automotive also found auto loan performance is decreasing as of December. According to the report, loans delinquent by more than 60 days increased by 5.3% and were up 26.7% from a year ago.
“The automotive industry is considered one of the biggest components of our economy. So when it slows down, it definitely impacts other quadrants and other components of the economic health,” said Brauer.