SANTA MONICA, Calif., Nov. 13, 2023 (GLOBE NEWSWIRE) — The used vehicle market is experiencing a course correction after years of price volatility and other disruptions caused by early supply chain setbacks in the COVID-19 era. As highlighted in the latest Edmunds Used vehicle reportEdmunds’ car shopping experts are seeing encouraging signs of the market stabilizing, including a 5.5% year-over-year decline in average used car transaction prices, near-new used car transactions again at prices significantly lower than brand new, and sales New cars arrive to used cars of all ages.
“The third quarter showed signs of a return to normalcy in the used car market, albeit at higher prices,” said Evan Drury, Edmunds’ director of insights. “Both dealers and consumers should benefit from reduced market disruption as pricing and transactions can be handled with less risk of the car’s value moving sharply in either direction over a short period – as has been happening for the past few years.”
Edmunds analysts revealed key new trends shaping the used car market in their third-quarter used vehicle report, including:
- The expected large price gap between new and nearly new used cars is back. No trend signals a return to normalcy in the used car market more clearly than used car pricing falling right under new values. Improving inventory in the new car market has put downward pressure on the used market, leaving the average price of 3-year-old used cars and newer vehicles $13,686 below the new car industry average price in the third quarter of 2023. This was A much wider gap than in the first quarter of 2022, when the difference was just $8,950.
- Used electric cars are cheaper as new cars see price cuts: Dwindling demand for new electric vehicles has led to significant discounts in the sector, negatively impacting the residual values of those already on the road. While all vehicles 3 years or newer saw a 4.8% decrease in value in September 2023 compared to September 2022, EVs specifically suffered a significant 29.5% decrease in value.
- The list of most and least consumed used vehicles on an annual basis offers more predictable results: With seasonality returning and vehicles depreciating appropriately once again, we see traditional market forces having their expected impact on used values. Among the 2021 model year’s most declining year-over-year are electric vehicles like the Tesla Model Y and 3 and the Ford Mustang Mach-E, whose resale values have declined due to new electric vehicle price cuts and attractive lease deals. On the less depreciated side, there are 2021 models with limited supply or lower levels of competition within their class, including the Toyota Tacoma, GR Supra, and Chevrolet Camaro.
- Used vehicles tend to age based on age and mileage, and they sell quickly: While some used market trends are returning to historical norms, newer, cheaper, readily available used cars have not yet returned en masse. Vehicle age and mileage for each price range on the spectrum have increased from Q3 2019 to Q3 2023, and the strong level of demand at all price points has resulted in vehicles moving from dealer to consumer at a faster rate. Shoppers who bought a used car in 2019 would need to increase their budget by nearly $10,000 to get a car with the same age and mileage today.
Strategies for used car shoppers
Since no two cars in your search are alike, Edmunds experts outline a number of shopping tips to help consumers navigate the used market:
- For the first used car shopper: If you previously found yourself only buying new cars but are looking for used cars this time, consider searching vehicles by generation. Although newer model years are usually the most desirable, you can realize savings by extending the model year and mileage limits to include older options within the same generation, which should offer a similar look and feel at a lower price. Consumers can start their search for local used inventory at Edmunds here.
- For used car shoppers wondering if Black Friday and winter holiday shopping will bring deals to the table: Overall, improving new car inventory and discounts indicate a good used car shopping opportunity, as these encouraging pricing dynamics flow from the new market to the used market. Although Black Friday deals are typically targeted at new-car shoppers, new-car incentives can serve as a guide to identifying the biggest discounts on the latest used cars, Edmunds analysts say.
- For first-time EV shoppers: If you’re considering buying an electric car but are hesitant about the long-term residual value, the used market may be a good option. Not only will you avoid the greatest loss of an electric vehicle’s residual value (the first few years of ownership), but most used EVs will still be within the federally required eight-year/100,000-mile battery warranty. Used EV shoppers can view estimated EV range and battery details on Edmunds’ used EV listings here.
“Anyone trying to compare today’s used car market to the pre-era market is likely to be upset by current values, but the stability is nonetheless an encouraging sign,” Drury said. “In the short term, consumers who have been on the fence should approach used vehicle purchases with more confidence knowing that the auto industry has overcome its most significant production line challenges in order to catch up to supply, and even outpace demand.”
Read Edmunds in full Our Q3 2023 used car report is here.
Edmunds guides online car shoppers from research to purchase. With in-depth reviews of every new car, shopping tips from an in-house team of experts, plus a wealth of consumer and auto market insights, Edmunds helps millions of shoppers every month choose, price and buy a car with confidence. Considered one of America’s Best Workplaces by Newsweek, Fortune, Great Place to Work and Built In, Edmunds is headquartered in Santa Monica, California. Follow us on TikTok, Twitter, Facebook and Instagram.