Are Used Car Prices About to Drop Again?

With the prices at used car dealerships lower than ever, many buyers are seizing the opportunity to get an affordable vehicle.

How to Decide When to Buy

Some recommend waiting for further price drops, but the situation isn’t that simple. Conditions are better now than they have been in years for car shoppers. Whether they’re heading to used car dealerships or purchasing new vehicles straight from the factory, buyers pay less than they were a few years ago.

The question is, does that mean now is the time to purchase a used car? Or are used car prices about to drop again?

Understanding Used Car Prices

Supply and demand drive new and used car prices. In a standard year, the automotive market is oversupplied. That changed with the COVID-19 pandemic and subsequent supply chain disruptions. Thankfully, conditions are finally returning to normal.

Though the prices are still higher than pre-pandemic for new cars, automakers are competing for buyer interest again with discount programs and specials. If there’s more supply than there is demand, that creates opportunities for buyers to negotiate better deals.

If you’re wondering how this affects the price tags at used car dealerships, it’s simple. When drivers can’t afford new cars, they buy used ones. When more buyers purchase used vehicles, the increased demand reduces supply and gives the dealerships the upper hand.

Car Prices Have Fallen Across All Sectors

Both new and used car prices have been falling. However, used car prices fell further last month than those for new cars. They remain higher than in 2019, but a used car is more affordable now than during the pandemic.

It’s important to note that some used car prices are down more than others. Unfortunately, the most affordable used cars are still the hardest to find. Used car dealerships struggle to maintain inventory of vehicles priced under $15,000.

Understanding Long-Term Trends

In the short term, increased supply has pushed down the price of new and used cars. However, experts don’t think that trend will continue. In this case, the problem isn’t with supply and demand. It’s with automakers’ increased focus on building premium cars.

Over the past five years, the number of new car models priced at $25,000 or less has dropped from 36 to 10. Dealerships are doing their best to represent their customers’ best interests, insisting that there’s still a place for affordable cars, but correcting the problem could take time.

Now Is the Time to Check Used Car Dealerships

While it’s true that prices may continue to fall as the supply of new cars increases and more drivers upgrade, the situation isn’t as simple as one might hope. Many new cars introduced to the market are more expensive models, affecting buyer access and long-term price trends.

It’s still difficult to find vehicles priced under $15,000 at used car dealerships, but experts don’t think that will change. Even if used car prices continue to fall, pre-owned premium vehicles account for most of the difference. Now’s the time to check used car dealerships for a deal.