Used car market trends have dramatically shifted over the last four years. Delays in parts manufacturing during the COVID-19 pandemic led to much lower production of new vehicles, which, in turn, caused used car prices to rise significantly. Post-pandemic, new vehicle production is back up, and used car price trends are gradually getting back to normal.
Vehicle shoppers and dealership owners alike still aren’t sure what to expect from used car prices, though. The question everyone is asking is, when will car prices go down? Let’s explore used car price trends that have emerged so far in 2024 and expert predictions on pricing through the rest of the year.
Used Car Pricing Predictions from 2023
In 2023, used vehicle inventory was still relatively low, while demand and interest rates were high1. In other words, it was not a buyer’s market for used cars last year. Despite this, car prices were starting to stabilize. New car prices were lower in the last few months of 2023 than they were during those same months in 20221. The average price for a new car in 2023 was $47,936 in October 2023, which is 1.4% lower than in October 20222. But will these price trends continue into 2024 and extend to the used car market?
At the end of 2023, most experts predicted that car prices would continue to fall slightly in 20242. They also expected new car production to increase in 2024, leading to lower prices for new and used vehicles. They estimated that new vehicle inventory would get close to the pre-pandemic levels, possibly leading to a surplus of cars2. With higher vehicle inventories, manufacturers are more likely to offer strong incentives and discounts3.
These factors don’t just affect the new car market; they also drive price trends in the used car market. As new cars decrease in price, used cars generally do, too. However, experts did not expect major price reductions for used vehicles in 20244.
Used Car Market Trends in Q1 of 2024
So, what has happened in the used car market so far in 2024? Used car prices have been falling, just like many experts predicted. Over the first nine weeks of 2024, prices gradually fell each week5. However, different types of vehicles experience price changes at different rates.
On average, used cars are down 0.25% from the previous week and 0.34% compared to the average from 2017 to 2019. Trucks and SUVs are also experiencing modest price decreases, dropping 0.16% from the week before and 3% over the last month. The segment experiencing the largest price decreases is compact cars, which fell 15% at auctions over the first few months of 20245.
Used car prices were down an average of 13.1% in early 2024 compared to 2023, but this data can vary between sources. For example, more modest decreases in used car prices year-over-year have also been reported. In January 2024, the average used-vehicle listing price was $25,328, a 4% decrease from the $26,505 average in January 20239. Prices were also lower in February 2024 than in January by 0.1%6. The question now is whether these trends will continue through the rest of the year.
Predictions for the Rest of 2024
Looking ahead to the remainder of 2024, how will used car prices continue to evolve?
Cars, Trucks, and SUVs Continue to Fall in Price
Experts predict that used car prices will continue to fall slightly over the rest of the year3. Expect to see used SUVs and sedans experience the largest price decreases in the upcoming months, which is consistent with early 2024 trends. These price decreases won’t be dramatic, though. The main trend that dealers and vehicle shoppers should expect is stabilizing vehicle prices with only subtle shifts, which is expected to be good news for dealers looking to win back wary customers⁷.
Electric Vehicles and Hybrids See Price Increases
Unlike most other used vehicles, used electric cars and hybrids may actually increase slightly in price over the rest of the year. Starting in January 2024, qualifying new electric vehicle purchases are eligible for a point-of-sale tax credit of up to $7,5008. These and other government incentives surrounding EV ownership will increase demand for electric cars, keeping their prices high on both the new and used market. There’s also growing interest in sustainability and environmental issues, which may contribute to high demand for EVs and high prices.
Increase in Used Vehicle Sales
Experts predict that the total volume of used vehicle sales will increase slightly in 2024 to reach 36.2 million7. This figure represents a less than 1% increase from 2023. Part of what is driving this increase is that new car production is getting close to pre-pandemic levels, leading to more vehicles on the used car market.
How Dealers Should Respond
Dealers always need to consider used car market trends when making inventory decisions for their dealerships. In light of the 2024 used car market trends, they may be able to find great vehicles at more affordable prices than last year or the year before. If you’ve been waiting for car prices to fall to stock up on more inventory, now is an ideal time to do so. Be careful when shopping for electric vehicles and hybrids, though, as their prices may rise. As the used car market shifts from a sellers’ market to a buyers’ market, make sure you’re pricing your inventory competitively to maximize your sales.
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Sources:
- Sola, A. (2023, December 21). Will 2024 be a good time to buy a car? Here’s what to expect, auto experts say. CNBC. Retrieved March 12, 2024 from, https://www.cnbc.com/2023/12/21/should-you-buy-a-car-in-2024-what-to-expect.html
- Yahoo Finance Team. (2023, November 18). Will car prices drop in 2024? Here’s what an auto expert predicts. AutoBlog. Retrieved March 12, 2024 from, https://www.autoblog.com/2023/11/18/will-car-prices-drop-in-2024-heres-what-an-auto-expert-predicts/
- Smoke, J. (2023, December 15). Forecast: 2024. Cox Automotive. Retrieved March 12, 2024 from, https://www.coxautoinc.com/market-insights/forecast-2024/
- Baggott, J. (2023, September 25). Investigation: What will happen to used car prices in 2024? When will used car prices fall? Car Dealer Magazine. Retrieved March 12, 2024 from, https://cardealermagazine.co.uk/publish/investigation-what-will-happen-to-used-car-prices-in-2024-when-will-used-car-prices-fall/290266
- Fischer, J. (2024, February 29). Used Car Price Trends for 2024. CarEdge. Retrieved March 12, 2024 from, https://caredge.com/guides/used-car-price-trends-for-2024
- Wholesale Used-Vehicle Prices Declined in February. (2024, March 7). Cox Automotive. Retrieved March 12, 2024 from, https://www.coxautoinc.com/market-insights/february-2024-muvvi/
- Suthenthiran, L. (2024, January 9). Used Car Prices Forecasted To Stabilize in 2024. Retail Wire. Retrieved March 12, 2024 from, https://retailwire.com/used-car-prices-forecasted-to-stabilize-in-2024/
- Iacurci, G. (2024, February 9). To get the $7,500 electric vehicle tax credit, you may no longer have to wait until tax season. CNBC. Retrieved March 12, 2024 from, https://www.cnbc.com/2024/02/09/for-7500-ev-tax-credit-you-may-no-longer-have-to-wait-until-tax-time.html
- Tucker, S. (2024, February 19). Average Used Car Price Down 4% Since Last Year. Kelley Blue Book. Retrieved March 12, 2024 from, https://www.kbb.com/car-news/averaged-used-car-price-down-4-since-last-year/
