Is it 2021 all over again? The price bubble of the past few years came to an end in late 2022 and early 2023 as used car prices fell sharply. However, wholesale used car prices are rising again this spring. Will car prices keep rising? With used car prices in 2023 remaining volatile, it’s never been more important to track the value of your car.
In March, used car prices are climbing again. We had seen 30 consecutive weeks of used car prices dropping at the wholesale level before a sharp reversal beginning in February. Used car prices are going back up, at least at wholesale auctions.
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Without further ado, let’s dive in.
Used Car Prices – March 2023 Update
In late 2022 and early 2023, used car prices declined (at wholesale auctions) for 30 weeks in a row. Wholesale prices and trade-in values are increasing yet again in March.
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.
Is the car bubble bursting? Let’s look at the data.
Through April , used car and SUV prices declined by ~5%. In May and June, we saw a reversal, with used car and SUV prices increasing week-over-week. July 2022 was when the market decline got into full gear, and used car prices were dropping steadily since. In March, that has changed.
The overall wholesale used car market saw prices increase +0.51% last week. Since, mid-February, wholesale prices have risen +1.82%. Cumulatively, used car prices have dropped -22.2% at the wholesale level over the past 8 months.
Used car prices (wholesale)
Some segments gained, while others continued to lose value. The overall car segment average increased by +0.61%. Prestige luxury cars were the only segment to decrease last week.
Compact and full-sized cars increased this week. Compact cars gained by +0.88%, and luxury cars gained by +0.26%. Full-size cars gained the most, by +0.90% last week.
Used Truck Prices (Wholesale)
We are now seeing a sharp reversal in light-duty truck segments. The overall truck segment increased +0.46% last week. Compact and full-size vans continued to decline, but every other segment increased at auctions last week.
Most segments saw price increases last week. Minivans increased more than all other segments, at +1.66% in one week. Compact crossovers increased by +0.86%, and all mid- and full-sized crossovers increased by about half of one percent in 7 days. Small pickups increased by +0.73%.
Since the onset of the pandemic, full-size vans have appreciated more than 60%. Now, we’ve seen wholesale full-size van prices drop -8% in the past three months.
Full-size truck prices have been stabilizing in early 2023, even as other segments experience volatility.
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 holding steady
As the data above shows, retail prices market-wide are holding steady following several weeks of falling prices. This is the effect of rising wholesale prices putting pressure on dealers to cover previous losses. Will retail used car prices rise like they were one year ago? It’s unlikely, but some marginal price increases could be seen in the weeks ahead.
Cars Are Sitting On the Lot Longer
The biggest difference between what we’re seeing in used car price trends in 2023 and what we saw in 2021 is that there’s no mad dash to buy up every car on the lot. Inventory remains much higher, and continues to creep upward. Below, you can see that used cars are sitting on the lot for longer, as reflected in higher days to turn.
Use this negotiation cheat sheet to stay in control of your deal
Older used cars have appreciated most
A new phenomenon we have begun tracking is that older used cars are appreciating more rapidly than younger used cars.
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?
Used car prices will keep falling in early 2023, however higher interest rates add costs to those financing. If you can manage to pay cash (or simply buy a less expensive car), you’ll save money on financing over the long run.
Used cars are sitting on the dealer lots for longer, and that creates better conditions for negotiating a better deal. Check out this must-have, 100% FREE negotiation cheat sheet.
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.
To sell your car for the most money, be sure to read this guide.
How much did used car prices increase in 2021?
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|
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 YAA 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.
Thanks to our friends at foureyes, we can share with you this real-time updating data set on used and new car prices.
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