The latest iSeeCars.com analysis has revealed a significant shift in used car prices in 2023, with prices dropping by 4.7 percent since September and 8.7 percent from a year ago. The study analyzed 1.8 million used car sales between February 2022 and February 2023 to identify used car pricing trends and which models experienced the biggest price increases and decreases. As a company that prioritizes transparency and fairness in the automotive industry, CarEdge is here to help you understand these trends so you can make smarter car buying decisions.
Fragmentation in the Used Car Market
According to iSeeCars’ executive analyst Karl Brauer, the used car market has fragmented over the past year. Although used car prices remain higher than pre-pandemic levels, they have consistently dropped over the past year, with an accelerated decline in the past six months. This fragmentation presents an opportunity for consumers to find better deals on used vehicles as the market adjusts to evolving conditions.
Biggest 6-Month and Year-Over-Year Price Drops
In terms of used car prices, the Tesla Model 3 experienced the most significant drop in the last six months, with a decline of 21.5 percent. Other vehicles like the Nissan Leaf and several hybrid models also saw significant price drops ranging from 11 to 22 percent over the same period. Luxury models like the Jaguar E-Pace and two Land Rovers were among the vehicles with the largest year-over-year price declines.
Tesla’s used car prices plummeted after Tesla suddenly slashed new Tesla prices by up to 13% overnight. Combined with the fact that used Tesla’s don’t qualify for the used EV tax credit (unless you’re lucky enough to find one under $25,000…), Tesla prices are likely to remain suppressed for now.
Take a look at the steady and steep price drops for this 2019 Tesla Model 3. These are the kinds of changes we’re seeing with used Teslas nationwide.
See our deep-dive into used Tesla price trends in 2023.
Interest rates have climbed tremendously year-over-year, and that’s certainly a leading factor in the decline of luxury car prices. The more buyers borrow, the more they owe in interest. But that’s not always the case, as we’re about to see.
Models with the Biggest Price Hikes
Despite the overall downward trend in used car prices in 2023, some models have experienced price increases over the past six and 12 months. Luxury vehicles, in particular, have seen price hikes, indicating that wealthier consumers are still willing to spend over the manufacturer’s suggested retail price (MSRP) to get the vehicle they desire. Fuel-efficient vehicles like electric cars, hybrids, and hatchbacks have also seen price hikes in response to the increase in fuel prices over the past year.
Hybrid Models Holding Up, Electric Vehicles Dropping Fast
Used hybrid vehicles have fared relatively well in the market, with prices dropping only about 2.1 percent in the past 12 months. The increase in fuel prices between February 2022 and February 2023 has heightened demand for fuel-efficient hybrids. On the other hand, used electric vehicles have seen a 13.9 percent price drop in the past year, which may be attributed to consumer reluctance to pay higher prices for used EVs amidst inflation and rising interest rates.
Vehicle Type Trends: Coupes, Hatchbacks, SUVs, and Minivans
When examining used car prices by vehicle type, coupes have actually increased in value compared to a year ago, possibly reflecting the strength in the luxury market. Hatchbacks and pickup trucks have seen the smallest price drops, while minivans and SUVs have experienced value losses of around 10 percent over the past year.
As the pandemic subsides and the supply chain improves, new car prices are beginning to fall, albeit still priced above the MSRP. However, the gap between list prices and MSRP is shrinking, and it is expected to continue contracting throughout the year. Dealers may be paying more for used cars at the wholesale level, but retail pricing does not reflect this, suggesting a compression in profit margins on used cars.
Black Book: Unexpected Growth in Wholesale Used Car Market Surpassing Seasonal Trends
According to recent data from Black Book, the wholesale used car market has been experiencing remarkable growth, with gains far surpassing the typical trends for this time of year. Pre-COVID, some segments would begin to see positive movement, but this year has already witnessed six weeks of consistent increases across most segments.
The overall Car segment grew by 0.63% last week, compared to a 0.46% increase the week prior. Out of the nine Car segments, seven saw growth last week. Sporty Cars, for example, picked up momentum with a 1.17% increase, marking nine consecutive weeks of growth. While the Prestige Luxury Car segment continued to decline, it experienced the lowest single week drop since July 2022.
The volume-weighted, overall Truck segment also increased by 0.43%, mirroring the increase from the previous week. Among the thirteen Truck segments, eleven reported growth last week. The Compact Crossover segment led the way with a 0.92% gain, marking the third consecutive week it held the top spot among Truck segments. Despite these increases, Compact and Full-Size Vans continued to experience a decline.
CarEdge is committed to helping you navigate today’s changing auto market. By understanding the shifts in used car prices in 2023, we hope to empower you to make the best possible car buying decision for your needs and budget. For more information on how we can help you save more today, check out our car buying help options below.
What do you think? Will car prices continue on this trajectory, or is another sudden shift around the corner?
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