- Used car prices fell 4% in August to the lowest level since last September, according to Mannheim data.
- One expert tweeted that falling demand would lead to an “absolute deflationary spiral” in used car parks.
- But while prices are dropping broadly, some manufacturers’ cars still prove to be solid investments.
Nick Hopper was looking forward to a used SUV to trade in for his 2017 minivan. This week, he chirp The price of the SUV has fallen to $40,000 from $75,000 in just six months.
For Hopper and anyone else putting off buying a used car, the market looks brighter.
Used cars were among the biggest sources of inflation in the pandemic era Semiconductor shortage Ceasing production of new cars and paying used car prices in line with – or even higher – the cost of a completely new car.
This phenomenon is now going the way of Zoom happy hours, near-empty flights, and grocery shopping. Used car prices fell 4% in August alone, according to Mannheim used vehicle value index. The edition shows prices at their lowest level since September and puts the index about 11% below its January peak.
The scale tracks a bucket of used vehicles based on mileage, mix, and seasonally adjusted, giving a comprehensive view of the used car market.
The broad index only captures a comprehensive view of the market. Used car prices vary widely, and as the market calms, certain models outperform while the values of others decline.
Winners and losers in the erratic used car market
Used Wagoneer models — the luxury sub-brand of Jeep — are declining even faster, with values down nearly 2% in the last month alone, according to CarGurus. It is possible that the relative youth of the models contributed to this decline, as Wagoneer SUVs have only been in production since 2021. However, the rapid decline indicates that the flip-flop culture that dominated the used car market in 2021 is no longer applicable.
In the meantime, Scion can’t blame its declining values for its new entry into the market. The Toyota sub-brand was discontinued in 2016, and its used cars are doing well in the current market. Scions used values have fallen 1.9% over the past month, second only to Wagoneer and the average drop in the entire market has tripled.
Despite the decline in the Scion sub-brand, Toyotas in general are doing a much better job of maintaining their value. Prices for pre-owned models are down just 0.04% from the same period last month, easily outperforming the rest of the market.
This strength may not last. Reddit user u/PreMixYZ shared a file Shopping Story In the UsedCars subreddit earlier in September, he noted that even used Toyota RAV4s, one of the most popular cars on sale today, are suffering from a weak market. Three days after being told that the price of the RAV4 used was “non-negotiable,” PreMixYZ received a call from the dealer offering $1,500 off the seemingly fixed price.
And they added, “I really wanted to say, ‘So you’re saying your man was lying to me?'” “
Cars that hold their best value generally fall into two camps: ultra-luxury sedans and affordable manufacturers. Used Bentley and Rolls-Royce prices are up 0.9% and 0.6%, respectively, likely buoyed by the scarcity of wealthy households and their strong investment returns during the pandemic.
And at the other end of the market, pre-owned Hyundais, Hondas and Mazdas hold their value. Used car prices from the three manufacturers have risen 0.3% to 0.9% over the past month, defying an industry-wide slump as Americans search for economical and affordable cars.
Even these traders adjust to the changing market.
“When I was shopping for a new car a few months ago, I called every Honda, Mazda and Subaru dealer in California and found some dealers of every brand with no markup,” said Reddit user u/EG-111 on August 25. Suspension. “Wait there, I think things will eventually return to normal.”
The car market correction still has a long way to go
Anecdotes from other car shoppers suggest there are some big discounts to be had in the coming months.
For those who are about to shop for a used car, patience will be rewarded. Prices may continue to fall 1% to 2% each week, and the end of the year may yield the best deals before a potential rebound, industry expert and newsletter writer employed only by CarDealershipGuy said on Wednesday. tweet.
Lots of used cars are on the losing end of the price cuts, and they are already preparing for a steep decline, Ofir Gottlieb, CEO of Capital Market Laboratories, chirp Friday.
“Talk to any (very) big used car dealer and you’ll hear the same thing,” he said. “An absolute downward spiral of deflation is coming for used car prices.”