Used Car Prices Are Set to Decline in 2023
Find the Latest Deals at In-House Financing Dealerships
The past three years have been challenging for used car buyers. Low inventories, skyrocketing prices, and rising interest rates have made the market unfavorable for those looking for a bargain. But signs point to used car prices falling in 2023. We will look at some of the latest trends, which can help decide if now is the right time to check your local in-house financing dealership’s latest inventory.
Movement in Used Car Prices
Is 2023 the year you find an affordable used car? Prices are still up but seem to have peaked. It’s looking more likely you’ll find better deals in the coming months. There’s evidence across the market of a downward trend. Here are some examples:
- Bureau of Labor Statistics: The consumer price index for November 2022 indicated a 2.9% drop from the previous month in used car and truck spending. It then fell 2.5% in December. This marked six consecutive months of price declines and a 3.3% decrease over November 2021 (new-car spending, by comparison, rose 7.2%).1
- J.P. Morgan: Between February 2020 and September 2022, used car prices climbed nearly 43%, according to automotive analysts. However, they’re predicted to drop 10% to 20% in 2023 as the production of new cars ramps up again, which should reduce demand. But less than a 5% decrease in new car prices is predicted, so the used car market is starting to look more favorable for those looking to save.2
- Cars.com: Based on data from Cars.com dealers, used car prices peaked at $24,721 in February 2022. The average for all used vehicles fell to $23,499 by October and was $23,000 in November. This is down almost 8% from the same time the year before.
Average prices have dropped significantly for popular models such as the Chevrolet Silverado 1500, Ram 1500, Ford Explorer, Ford F-150, and Toyota Tacoma. The Toyota RAV4 and Honda CR-V saw modest decreases; however, Toyota sedans didn’t follow this trend. The average price of a used Corolla remained the same and the Camry rose 0.6% year-over-year.3
Trade-In Values Remain High
The average trade-in value hit $10,381 in June 2022, according to J.D. Power. A record high, that represented a 49% jump in a year. Average trade-in values then started falling after three months above $10,000. The average trade-in was $9,316 in December, down from the year prior but significantly more than in previous years. Values are expected to fall with the trend of decreasing used car prices.4
Price Trends Across Model Years
The average price overall for used cars is up a staggering 26% over two years. But there’s hope. Used car prices are expected to drop more steeply for recent model years. According to Cars.com, the average price of a 2020 model was down 4% between November 2021 and November 2022 (2021 models have declined more than 18%5). However, the average price of a 2018 model was up 1%. For 2013 models, there was no change in the average price.3
Used Car Prices Are Headed Toward Pre-Pandemic Levels
According to the Manheim Used Vehicle Value Index from Cox Automotive, wholesale prices dropped 15% in December.5 By mid-January 2023, they were down 13.7% from January 2022.6 The 15% decline was the largest it ever reported, but pales compared to the 88% spike reported between April 2020 and January 2022. Prices are expected to continue dropping as used (and new) vehicles spend more time on the market. Listings of used cars in the $10,000 to $20,000 range have already begun to increase.
Visit Your Local In-House Financing Dealership Today
At Hawthorne Auto Square, we have a huge inventory of pre-owned makes and models. We provide buy here pay here financing and no credit check loans in Los Angeles to help get you into a low-mileage vehicle. You can also value your trade-in online; in less than a minute, you can get the Edmunds True Market Value® of your car. Visit our dealership in Hawthorne, apply for financing online, or call 866-707-7664 to get started.
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