There are both good news and bad news if you’re seeking to purchase a used automobile or truck.
The good news is that used car prices have decreased from their record highs from last year. The bad news is that demand and supply are still just right where they are to keep prices at historic highs and prevent them from declining anytime soon, according to Edmunds.com’s first quarter 2023 Used Vehicle Report.
“Consumers returning to the used market for the first time in years might find conditions a bit shocking,” said Ivan Drury, director of analytics at Edmunds. “Until recently, $20,000 was thought to be an appropriate price to pay for a used car in order to obtain the ideal ratio of miles and age. Consumers who spend $20,000 get a significantly older or higher mileage automobile nowadays.
Does the cost of used cars decrease?
According to Edmunds’ research, the average transaction price for a used car fell from $30,329 in the first quarter to $28,381 this time last year. However, it has increased by 44% from the first quarter of 2004, when consumers could purchase used cars on average for $19,657.
According to a research by Edmunds, fewer used cars sold in the quarter for under $20,000 than they did five years prior (31% vs. over 61%).
The supply of used automobiles is being constrained, which is why prices are so high, as there were only 559,000 new car leases in the quarter, down from 1 million in the first quarter of 2018. This indicates that fewer drivers are returning cars after their leases end to add to the used-car backlog.
Additionally, according to Edmunds statistics, the number of vehicles traded in decreased to 5.5 million in 2018 from 6.2 million in 2017.
The limited selection of used cars for sale is also influenced by car rental firms.
The quantity of automobiles those companies would supply to the used-car market decreased as they struggled to obtain new vehicles during the current parts shortages. The vehicles leaving the rental fleet right now are far more expensive and older than they were before the parts scarcity.
Do you own a used car? Get cash.
On the other hand, less than 1% of new automobiles sold in the first three months on the industry’s new vehicle side. In comparison to the first quarter of 2018, when it averaged $35,784, the transaction price for a new car in the first quarter of 2023 was $47,774.
But let’s get back to that fantastic news.
You will be compensated if you are a car owner who has kept your vehicle longer than you might have due to the high cost of new vehicles and inventory shortages. Even though it has more miles on it, your trade-in is probably worth more now than it would have been if you had traded it in sooner, according to Drury.
For instance, according to Edmunds’ survey, the average mileage of a 2018 Toyota Camry was 60,565 miles for the first quarter. When compared to three years ago, when a 2018 Camry trade-in had an average of 26,288 miles on it, it represents a 130% increase. However, Edmunds’ statistics showed that instead of a price drop, the limited supply of used cars on the market in the first quarter of this year increased the average transaction price of that car by 8% to $21,223 from $19,656 in the first quarter of 2020.
