When Will Used Car Prices Drop? Year-End Sales Could Be Key

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Last updated Nov 14, 2023

As the 2023 holiday season approaches, the automotive market is showing signs of change, particularly in the used car sector. After a period of record-high prices in 2022, there’s a light at the end of the tunnel for those seeking more affordable options. While used car prices have remained flat at retail lots, a steady decline has continued for months at wholesale auctions. Lower prices may soon reach retail consumers, with year-end sales in the new car market being the catalyst. Let’s take a look at how used car deals could play out in December. 

The cost of borrowing money is at a 20-year high, and used car sales are feeling the impacts. Demand for used cars has been on a slight downward trend in 2023. As of the most recent data from October, used car sales are down by 4% year-over-year. Unfortunately, used car prices have resisted downward pressure for most of the year.

Finally, that could be starting to change. Retail used car prices have seen a modest reduction of 0.7% over the past month after numerous ups and downs. However, since the start of 2023, prices have not moved much, hovering around an average listing price of $26,500. This is despite wild swings in wholesale prices.

The pace of this price decline has been slow, largely due to the supply of used cars in the retail market. With a current 49-day supply, down only slightly from previous months, a significant increase in inventory would be necessary for a more substantial drop in prices. However, patient buyers may finally get the relief they’ve been hoping for.

Stay updated with the latest trends and data on used car prices by following our weekly price updates at CarEdge.

When Will Used Car Prices Drop? All Eyes On December

when will used car prices drop?

For those waiting for a drop in used car prices, December 2023 appears promising. The potential for substantial price reductions is on the horizon, accelerated by Black Friday deals drawing more buyers to new car lots as early as November.

Interestingly, the key to understanding the potential for a used car price drop lies within the new car market, specifically in year-end sales dynamics. The end of the year is traditionally a prime time for new car purchases, as dealers and automakers strive to clear out current year models. This year, an abundance of new car inventory is anticipated, with the overall new car market experiencing an 83-day supply as of November. Some brands, such as Jeep and Ram, have over 100 days of inventory. This surplus exceeds the healthy market-day supply range of 40 to 60 days, indicating a pressing need for sales. How does this play into the used car market?

This surplus in the new car market should benefit used car buyers. Massive new car sales in December are likely to divert consumer attention from used to new vehicles. The appearance of attractive financing offers, like 0% APR could further encourage this shift.

In fact, used car buyers may want to reconsider once they realize the cost of today’s interest rates. A new car at MSRP with 0% APR financing may be a better deal than a used car at 14% APR. Believe it or not, today’s average used car loan rate is 14% APR. 

How much will that interest cost you over an entire loan term? A $25,000 used car loan will actually cost you $35,000 over a 60 month term once the average 14% APR is factored in. You could get a decent new car with low APR for about the same price.

Be sure to check the best new car deals this month.

How Much Will Car Prices Drop?

How much might used car prices drop by the end of 2023? Car dealers have been notoriously stubborn with their sticker prices, as evidenced by unchanged average listing prices this year. What will improve most in December is the negotiability of used cars. For car buyers prepared with negotiation know-how, December will present a rare opportunity to save thousands of dollars. 

For all but the most in-demand models, buyers should be able to negotiate 10% off of the listing price for used cars.  For the average priced used car, that would amount to approximately $2,500 in savings. 

Remember, you can always check local market dynamics with CarEdge Data. Perhaps your dream car is more negotiable than you’d think!

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2 Comments

  1. Travis Smith

    Thank you for this video. I just sold my old pick up. I am in the market for a good used vehicle. I am retired and have another vehicle but I am in the market for a Chevy Colorado or other midsize truck. I went around looking and local dealer prices are just….frankly retarded. I am not paying 22k for a 2016 model with 175k miles on it. Best bargain I found was a 2019 Colorado for 20k and it had 137k miles on it…..however after inspecting it needs a full front suspension rebuild. Struts to the ball joints and CV Joints plus brakes. The U- Joints on the shaft were iffy too. Basically may as well just get a full kit. If I did it myself it would run me around 800 dollars. If I had a mechanic do it it would run me around 1800 here locally. The dealer scoffed when asked for an 800 cost discount for the parts and was pissed I took the time to do a solid inspection, said I was wasting time ( I damn sure wasnt wasting money). Told me the price is what it is and I voted with my feet. After watching your video I am not buying. I am going to wait until new car prices go down and I will just get a new one. Short of a massive price correction in used cars ( around 40% or more) I wont buy a used car again for as long as I draw breath. Its just not worth being bent over a barrel like that. At least with a new car I will have a good warranty and for sure financing. Thank you for the eye opener. These car sharks are about to be eaten by a shitty economy. I am going to watch from the shore and save my money.

    Reply
  2. Lari

    For prospective buyers, please do not look at recent sales as a barometer for what you should pay. In a market of falling prices (which this is), anything you look at online should be a “great” deal for openers. Never buy on your first trip. Simply walk away and let them know you are probably smarter to wait as prices will be lower next month and there is plenty of inventory if you lose this car. And if the sales manager has not gotten directly involved in your negotiation, you have left money on the table. Finally, always ask for total drive away fees and only pay what is legally required eg tax. You do not need to pay anything else! This is now a buyers market. Let’s all help each other out by behaving accordingly. The sellers made their fortunes from all of us over the last few years. Don’t feel sorry for them.

    Reply

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