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When my dad and I founded CarEdge in 2019 we knew that the way people bought cars was inevitably going to change. Our best guess was that the hassle of negotiating a car deal would stick around for another 20, maybe 30 years. We hoped that by then the price of a car would simply be the price of a car, and the “grind it out” nature of trying to buy an auto at a fair price would be long forgotten.
Well, I think we may have been wrong.
Over the past week, two memos have been leaked from major domestic automakers. One from Ford, and another from GM (screenshots below). Both of the letters are directed towards their dealer bodies, and they each make it clear: stop screwing around with customers and tarnishing our brand.
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Could the beginning of the end of car dealerships be happening right before our eyes? I think the answer is a resounding “yes”.
Why car dealerships exist
Before we unpack the memos from Ford and GM, let’s take a trip down memory lane. Why do car dealerships even exist?
Reports vary, but the first car dealership was opened in either 1897 or 1898. Automakers of this era leveraged a variety of sales channels to sell their initial vehicles, dealer partners being one of them. These partners were exactly that; partners. Dealers were not owned and operated by the automaker, instead they were independent third party businesses that agreed to abide by rules and regulations put in place by the automaker.
Automakers loved this model. It was (and still is) highly profitable for them. They loved it so much that they lobbied state-by-state to pass “franchise dealer” laws that make it illegal for a vehicle manufacturer to sell directly to a consumer, instead they have to sell through a franchised dealer.
Traditional automakers are great at designing, manufacturing, and distributing their product. They are not interested in day-to-day customer engagement, setting up service appointments, or doing anything beyond building and selling cars to their dealers.
Automakers get paid when they wholesale a vehicle to their dealer partner. Then the dealer has to (no pun intended), deal with the end user. In this way, legacy automakers have been able to separate themselves from the expensive practices of customer engagement and instead pass that along to their dealer partners.
Why do car dealerships exist? Because automakers have been able to generate massive profits from this system. However, after 100+ years, it appears another model may potentially be even more valuable for them.
Sell directly to customers
Tesla notoriously refused to sell their cars through dealer partners. Instead, the upstart EV automaker insisted on having their customers purchase directly from them. This is illegal in many states, however after lobbying for many years, most states now have “carve out” laws that allow EV manufacturers to sell directly to consumers.
Here’s example of that “carve out” language in Connecticut:
Would allow a manufacturer to receive a dealer’s license if it does not have a franchise agreement with a new-car dealer in the state, if it builds only electric vehicles and only sells the vehicles it builds, and if it does not have a controlling ownership link to a manufacturer licensed as a dealer in the state.
Nowadays EV automakers can sell direct to consumer in many states via the internet, and they are just starting to prove how lucrative this business model can be. Tesla, Rivian, and Lucid are shining examples of how valuable direct to consumer sales models can be. Tesla is a $1T+ company, and Rivian, even though they’ve only sold a few hundred vehicles is valued at north of $100B. Ford, GM, and other legacy automakers want to catch up. For perspective, Toyota, the highest valued traditional automaker, is “only” worth $330B.
The Ford and GM memos
Within the past week both Ford and GM have sent memos to their dealers that say the exact same thing: don’t tarnish our brand, treat customers well, or lose allocation of inventory from us. These leaked memos represent the first attempt Ford and GM are taking to “stand up” to their dealers.
The memo from GM President Steve Carlisle
The memo from Ford to their dealers
Both memos reference the dealership’s franchise agreement, and both make it clear that if the dealership does not treat customers in a way that enhances their brand, they will take away allocation of inventory.
Sure, these memos represent the first time we’ve seen automakers stand up to their dealers, and for that reason, we’re excited to see them, however the issue is, if GM or Ford actually tries to enforce their own rules they’ll certainly get taken to court. Why? Because nearly every Ford and GM dealership in the United States breaks their rules, so if they begin to selectively enforce the rules, you can be certain some dealer groups will fight back.
What happens next
While the franchise dealership model has served automakers well for 100+ years, it’s clear as day that a transition away from that model is upon us. This transition won’t happen overnight, and we shouldn’t expect dealerships to simply vanish. Dealerships play a vital role in society, especially when it comes to vehicle repairs and maintenance, however it appears clear that Ford, GM, and many other automakers want to catch up to Tesla’s valuation, and one of the ways they’ll do that is by taking more control of the sales process.
Dealerships aren’t going anywhere anytime soon, but the shift away from the dealer model is happening 20 years earlier than we had imagined. It will be interesting to see how this market evolves, especially as Tesla and other EV startups continue to get praise.
It goes without saying that the Ford F-150 Lightning is one of the hottest new electric trucks to hit the market in 2022. With over 200,000 reservations and a groundswell of support to produce more EV trucks, Ford appears to be “all-in” on the F-150 Lightning. So much so that Ford is beginning to play a bit of hardball with their dealers and their customers, unlike anything we’ve ever seen before.
Click to view
👉 A memo sent from Ford corporate to their dealers was recently leaked online, and from it we learned a lot about how the legacy automaker is thinking about the release of the F-150 Lightning. “It has come to our attention that a limited number of dealerships are interacting with customers in a manner that is negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation.” Huh, a car dealer interacting with customers in a way that is not consumer-centric? We’ve never heard of that!
Here’s what you need to know about the new 2022 Ford F-150 Lightning, it’s pricing, how dealers are (and aren’t) marking it up, the “no sale” clause and more.
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2022 Ford F-150 Lightning Price & Incentives
Pricing for the 2022 Ford F-150 Lightning was recently announced and confirmed by Ford. The MSRP before options for each trim level are:
Base – $41,669
XLT – $54,669
Lariat – $69,169
Platinum – $92,569
An additional $10,000 will get you the Extended Range battery pack, and myriad other options can easily increase the MSRP of a new 2022 F-150 Lightning.
There are no currently no incentives on the Ford Lightning (with the exception of existing military and first responder discounts). Ford continues to offer financing incentives, which may become more attractive as the Federal Reserve contemplates interest rate hikes in 2022.
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Pricing for the F-150 Lightning is competitive with the other electric trucks that are on the market and have been announced by major automakers.
2022 Ford F-150 Lightning Dealer Markups
In the memo from Ford to their dealers they explicitly stated, “Examples of these negative interactions include demanding that customers who are already on the reservation list for the 22 MY [2022 model year] F-150 Lightning make additional deposits or payments. These actions are perceived as threatening customers by withholding their opportunity to convert reservations to orders.”
If you are on a Lightning reservation list and your dealer is requesting you put down an additional deposit or pay extra to retain your reservation, you DO NOT need to do that. Reference this memo when you reply to the dealer. Ford is adamant about preserving some sort of “positive” customer experience when it comes to purchasing the Lightning.
For the first time in a long time, we have an automaker standing up to their dealer body. Traditionally, automakers let their dealers do whatever they want with customers. At the end of the day MSRP does stand for “Manufacturers Suggested Retail Price”. That being said, Ford recognizes that companies like Tesla (which is currently valued at 10 times the valuation of Ford) have improved the customer experience, and Ford needs to catch up.
The memo goes on to read:
“This behavior is not allowable under Paragraph 6 of the Sales and Service Agreement. Paragraph 6(i) states that ‘The Dealer shall conduct dealership operations in a manner that will reflect favorably at all times on the reputation of the Dealer, other Company authored dealers, the Company, Company Products and trademarks and trade names used or claimed by the Company or any of its subsidiaries. The Dealer shall avoid in every way any ‘bait’, deceptive, misleading confusing or illegal advertising or business practices.'”
This part of the memo is a bit humorous since Ford could easily reprimand all of their dealers for false advertising. As we all know bait and switch practices, deceptive pricing, and misleading and confusing tactics are used day in and day out at countless dealerships. That being said, Ford is threatening to not allocate F-150 Lightning inventory to dealers who behave in this way with the Lightning. That’s newsworthy as it’s the first time Ford or any major automaker has stood up to their dealers on a mass-market vehicle, and it could signal the beginning of the end for unilateral dealer control over the customer experience.
2022 Ford F-150 Lightning “No Sale” Clause
Ford is not only exhibiting control over their dealers, they’re also trying to control the re-sale market of the Lightning. From the memo, “In order to prevent the re-sale of 22MY F-150 Lightning, Ford is offering support for a No-Sale Provision to be signed by the customer at the time of purchase. Dealers may add this language to existing closing forms or create a new standalone document.”
The language Ford sent to their dealers reads, “Purchaser hereby agrees that it will not sell, offer to sell, or otherwise transfer any ownership interest in the Vehicle prior to the first anniversary of the date herof. Purchaser further agrees that Seller may seek injunctive relief to prevent the transfer of title of the Vehicle or demand payment from Purchaser of all value received as consideration for the sale or transfer.”
The memo goes on to state, “Dealers should consult with their legal counsel to address any state-specific requirements.”
Not only is the legality of this language a question, the ethics of it are questionable too. How can Ford try and control what a consumer can do after allowing their dealers have been adding additional dealer markup to their vehicles for over a year now?
Ford recognizes that their customers could make a profit by buying a new 2022 F-150 Lightning and re-selling it on the used car market. They have added this language to prevent them from doing that, but they haven’t done anything to stop their dealers from adding tens of thousands of markup to their vehicles. This seems like an overstep. Instead of trying to control consumers, Ford should focus on controlling their dealers first.
At the beginning of June, U.S. dealerships had about 3 million new vehicles in stock, representing a jump from 2.7 million cars at the start of April.
New vehicle sales saw growth in the spring, but summer is bringing a slowdown to the new car market. According to Cox Automotive, sales rates are rising, and are now 12% higher year-over-year.
Retail sales of new vehicles have followed strong seasonal patterns this year, with consistent weekly gains throughout the spring. A significant spike occurred at the end of March, driven by a rush of buyers responding to an import tariff announcement. In May, inventory increased sharply. This trend is continuing into June.
Here are important definitions that will help you understand and interpret the data below:
Market Day supply: This is the number of days needed to sell all vehicles in inventory, based on the previous month’s daily selling rate. Learn more about MDS.
Inventory: This is the unit count of vehicles on hand at dealerships, factory lots, ports of entry, and in transit.
Cars with the Most and Least Inventory in June 2025
After years of volatility, new car inventories are in line with historical norms. However, a new disruption has emerged in 2025: tariffs. As car buyers rush to purchase before likely price increases, new car inventory is falling this spring season.
As we can see below, Stellantis brands have the most inventory, followed by Nissan and Volkswagen among the mainstream automakers. Toyota and Honda brands have the least inventory, and as a result, the least negotiable prices.
To provide car buyers with additional insights, we’ve pulled the latest inventory data for the best-selling cars in America for top brands. Looking for local data? Check out CarEdge Insights.
Ready to outsmart the dealerships? From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your FREE cheat sheets today!
Used car prices trends for 2022 have been interesting. In 2021, unlike any other time in history, used car prices increased. What used to be a depreciating hunk of metal was an appreciating asset, but the car price bubble wasn’t sustainable in the long term. With used car prices remaining volatile, it’s never been more important to track the value of your car.
During the first quarter of 2022 used car prices dropped nearly 5% on the wholesale markets. Springtime brought another increase in used car prices. As we approach autumn, we’ve now seen 24 consecutive weeks of used car prices dropping at the wholesale level. Used car prices are going down, as you’ll see in the latest data below.
While wholesale used car prices have declined significantly over the past ten weeks, retail used car prices have remained fairly steady. That may soon change. The demand for used cars has weakened in recent weeks, and we’re now seeing increases in used vehicle listings as cars sit on the lot longer.
Used car prices in 2023 will continue to decrease. Higher interest rates combined with greater new car inventory will continue downward pressure on used car prices in 2023.
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👉 Bookmark this page. Just like we did last year, each week we’ll update this URL with the latest used car price trends. Our hope is that by being informed of the trends in used car prices you can make smart financial decisions about when to trade-in, sell, or buy a car.
Without further ado, let’s dive in.
Used Car Prices 2022 – December 2022 Update
As of December, used car prices declined (at wholesale auctions) for 24 weeks in a row. We expect this trend to increasingly translate to retail sales.
What types of used cars are dropping, which are increasing? Is now a good time to buy a used car? Should you sell your car now, or wait for prices to go back up? Let’s answer those questions and more.
Car prices are going down. Is the car bubble bursting? Let’s look at the data.
Through April , used car and SUV prices declinedby ~5%. This was more depreciation than we’d expect in a “normal” year for the same time period. The rate of depreciation increased in February from January, however the trend reversed in March and April.
In May and June, we saw a reversal, with used car and SUV prices increasing week-over-week on the wholesale market. In December, the overall market is dropping, with no vehicle classes continuing to appreciate.
The overall wholesale used car market saw prices drop -0.88% last week. Cumulatively, used car prices have dropped -19% at the wholesale level over the past 6 months.
Used car prices (wholesale)
Mass-market car segments dropped the most last week. Compact and sub-compact cars dropped by over -1%, mid-size cars by -0.86%, and full-size cars by -0.43%. Overall luxury car prices fell by about 1% last week.
All used car segments saw declining prices last week, with an average of -0.86%. The week before, car prices were down -0.87%.
Source: Black Book
Used Truck Prices (Wholesale)
We are now seeing a sharp reversal in light-duty truck segments. The overall truck segment decreased -0.90% last week. Compact crossover prices declined the most, by -1.20%.
Mainstream crossover and SUV prices all fell by between -0.79% and -1.20% last week.
Source: Black Book
Since the onset of the pandemic, full-size vans have appreciated more than 60%. Now, we’ve seen wholesale full-size van prices drop about -5.0% in the past two months. This week, van prices dropped -0.41% in one week.
Year-Over-Year Prices Remain High
The graph below looks at trends in wholesale prices of 2-6-year-old vehicles, indexed to the first week of the year.
Retail used car prices are finally declining
In 2022 (green), used car prices have dropped at the retail level.
When will retail used car prices go down? Black Book’s weekly price index suggests that used car prices will steadily drop in 2023, after four months of slow but steady price declines in 2022. We expect prices to continue falling into 2023 due to the combined effects of higher interest rates restricting buying and the greater availability of new cars, which often have competitive promotional APRs.
We’re starting to see retail prices come down. Cars are also sitting on the lot for longer. As more vehicles sit on the lot, dealers will be more willing to negotiate.
A new phenomenon we have begun tracking is that older used cars are appreciating more rapidly than younger used cars.
*Data as of April 2022
This is primarily a function of consumer demand. Retail customers that want to purchase a car at a sub $20,000 price-point are being forced to look at older used vehicles because the new ones have increased in value beyond their budget. This is scary, crazy, and a whole host of other words.
Is now a good time to buy a used car?
Wait until at least mid-September to buy a car. We expect to see retail prices decline beginning in early September, following eleven weeks of wholesale declines.
Used cars are sitting on the dealer lots for longer, and that creates better conditions for negotiating a better deal.
When should I sell my car to get the most money?
Sell as soon as you can. Used car prices are already dropping, and we expect retail prices to decline more in September.
Depending on who you ask (Cox Automotive, Edmunds, CarGurus, or Black Book), retail used car prices increased anywhere from 32% to 36% in 2021.
Black Book shows a 35% increase in retail used car prices for 2021 (the purple line). For comparison, the orange line shows a 7% appreciation for used car prices in 2020, and the blue line shows a 3% depreciation of used car values for 2019.
Here’s a month-over-month table showing used car price trends for 2021:
Month
Average Used Car Price
January
$22,112
February
$21,573
March
$21,343
April
$22,568
May
$24,414
June
$25,101
July
$25,500
August
$25,890
September
$26,548
October
$27,067
November
$27,569
December
$29,000
This data, supplied by Cox Automotive, shows the incredible ascent used car prices took in 2021.
Used van prices increased the most
Different types of vehicles have appreciated more than others. Vans have increased in value the most of all used cars. Take a look at this chart and data from CarGurus.
In 2021 used van prices increased over 56%, whereas CarGurus’ data showed a more modest (yet still insane) 34% increase for used car prices in general.
Used van prices have increased the most across vehicle segments for a few reasons:
Vans are typically lower profit new vehicles for automakers, and as a result of not having enough chips to produce new vehicles, automakers are drastically limited production of new vans;
Many people have taken to converting vans into their living quarters;
Many businesses that previously would have bought their vans from fleet sales are going to the used market to find supply.
For these reasons, and many more, used van prices have increased the most of any segment of vehicle.
Wholesale used car price trends are even crazier
Every used car has two prices; the wholesale price, and the retail price. As consumers we typically concern ourselves with the retail price, and with good reason, unless you have a dealer’s license you can’t buy a car wholesale at an auction.
That being said, wholesale used car prices are the lifeblood of car dealers, and the used car price trends we saw on the wholesale side in 2021 were truly unfathomable. While retail used car prices increased ~36% in 2021, wholesale used car prices rose 52%.
There is an obvious interplay between wholesale and retail prices. As wholesale prices increase, we can expect retail to prices to do the same. Here at CarEdge we are concerned that retail prices will stay highly elevated for a long time (potentially all the way through the fall of 2022) because car dealers will not want to discount their inventory that they grossly overpaid for earlier in the year.
Interactive data
Thanks to our friends at foureyes, we can share with you this real-time updating data set on used and new car prices.
As you’re well aware, used cars aren’t supposed to appreciate, however in 2021, used car prices have increased by nearly 50% across the industry. That has led many of us consumers to utter a question we never thought we’d have to say, “When will used car prices drop?”
In “normal” times, used car prices are always dropping (they’re depreciating assets after all), however as the chip shortage and supply chain challenges have reared their ugly heads, we’ve seen some used cars appreciate to levels that were once incomprehensible. Many one to two year old used cars have sold for more than their original MSRP — it’s truly insane!
If you find this content valuable and helpful, please consider sharing it with a friend or family member. Let’s dive in.
Used car prices will go down in 2022
Let’s start here; our prediction is that used car prices will begin to drop in 2022. The natural next question is “when?” To answer that, let’s look at what the “experts” are saying:
Data from Black Book shows a “softening trend” in wholesale prices as we reach the end of 2021, a potential indicator of prices declining in 2022
It’s important to understand that there are two prices for each used car that is sold in the United States; the wholesale price, and the retail price. Wholesale used car prices are the prices dealers have to pay for inventory, and retail used car prices are what us consumers pay at the dealership.
Wholesale used car prices
Black Book’s data shows us that wholesale used car prices have increased upwards of 50% in 2021, while retail prices have only increased by 35%. There is an inherent and obvious relationship between wholesale and retail prices, and retail prices typically trail the movement of the wholesale market.
2021 wholesale used car prices are represented as the purple line.2021 retail used car prices are represented as the purple line.
Recently, we have begun to see softening on wholesale used car prices. From Black Book:
The softening trend continued this past week, with the overall market slowing the rate of increase, sales rates declining, and more segments reporting decreases in prices compared to the week prior.
It appears as if the wholesale used car market is plateauing. This is a good sign, however retail prices will likely continue to rise for months to come. This is in part because dealers who bought used cars at inflated wholesale prices will hold on to them until they can find a retail customer to purchase. In prior years, dealers would be more interested in “turning” their inventory so that they could mitigate interest costs on the vehicle, however since interest rates are very low right now that likely won’t be a driving factor.
Retail used car prices
While wholesale car prices soften, we expect retail used car prices to continue to increase through the first quarter of 2022, especially amidst tax season. We also expect wholesale prices to increase (although less rapidly) in the first quarter.
Consumer availability to credit is high. A recent survey from the Federal Reserve showed that some financial institutions loosened their lending standards. As a result we expect consumers to continue to have relatively easy availability to financing for their vehicles purchases. This will also keep retail used car prices high, since dealers will be able to find financing options for their customers that get them to a comfortable monthly payment.
During the “spring selling season” we will continue to see increases in used car prices. It is by the summer that we anticipate some signs of price declines in wholesale and retail used car prices. The KPMG white paper proposes that used car prices could drop significantly as early as October of 2022, and we agree with them. Prices may continue to stay inflated if new car production continues to be hampered in 2022, however signs are pointing to automakers getting through the worst of their production issues.
Fall of 2022 is when used car prices will drop
As we survey the landscape of the automotive industry, it seems clear that the fall of 2022 represents the most likely time for used car prices to drop in 2022. Traditionally the fall and winter months are when used car depreciate the most. This seasonality, paired with increases in new car production, and likely increases in interest rates, should ultimately drive some downward pressure on used car prices.
One factor that we cannot account for is the potential for government tax incentives on electric vehicles. While Congress has yet to pass a bill that contains EV tax credits for 2022, there is a lot of speculation that they will. Proposed credits would significantly increase consumer demand in new and used vehicles, and if this were to happen, it may very well offset the downward pressures on used car prices.
There are also a lot of questions surrounding new car production. While manufacturer’s such as Toyota have published press releases signaling they’re through the worst of their manufacturing woes, only time will tell if that’s actually true. Boston Consulting Group thinks it will be 2025 when new car production meets demand, so questions still remain about how much new car inventory will be available in 2022.
If manufacturers are unable to improve new car supply in 2022 we could see used car prices continue to increase. Our best guess is that automakers will be able to incrementally improve their new car supply throughout the year. We are already seeing signs of this in 2021 as AutoForecast Solutions has begun to revise their worst-case chip shortage estimations downward instead of upwards.
CarEdge Insights
