Is the Used Car Market Starting to Stabilize?
It’s been a bizarre time, and we’re only referring to the prices in the used car and truck market. For the past several months, we’ve watched used cars appreciate, which is typically unheard of of unless it’s a rare car. For example, the price of a used Toyota Tundra costs more than a brand new truck without any miles. However, this peculiar trend seems to balancing out and approaching a sense normalcy.
After months of steep price increases caused by low inventories of pre-owned vehicles and chip shortages, causing new car lots to be empty, the used car market seems to be stabilizing. According to the auto auction giant Manheim, the average wholesale price of used cars dropped 1.3 percent in June, the first such decline in six months.
Even if you’ve been looking to purchase a used car, you shouldn’t drop everything and run outside just yet. Retail prices are notorious for lagging behind what the dealers pay by a month or two, so it’ll still be several weeks before you can expect to see any relief. However, this downward trajectory can allow those who need a car to breathe a sigh of relief that the market is slowly correcting itself.
Manheim also released prices of the average auction prices in June, which were $19,997, compared to $15,765 at the same time a year before. Pickup truck prices remain the most inflated and are as much as 49.5 percent more expensive than they were this time last year, so it may be a little longer if you’re looking to purchase a used pickup. However, there have been announcements of some pretty sweet new trucks. For example, Chevrolet recently announced their answer to the Raptor R and TRX.
The issue has raised alarms for more than consumers. The Federal Reserve mentioned that they’re keeping their eye on inflation. The spike in used vehicle prices seems to be attributed to robust demand and limited supply, but the Feds will continue watching. Fortunately, it appears as though it’s reversing course, albeit slowly. Time is our only indicator for now, and it’ll be something to continue observing.
Do you think used car prices will level out to previous averages, or can we expect to pay more in the long term?