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Used-Vehicle Prices See Biggest Drop Since Pandemic Onset

Prices have dropped in the used-vehicle market | Photo: D.Boshouwers
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Daniel Rufiange
Inventories are up while demand has cooled, helping to stabilize prices

•    The average price of a used vehicle has seen its biggest monthly drop since the start of the pandemic.

You've noticed, as we have, that used car prices have risen dramatically since the start of the pandemic. The main reason is the more restricted access to new vehicles, which has had a direct impact on demand for used ones. 

We're all hoping for a return to normality. It's one thing for new vehicles to be out of reach to consumers on a budget, but when even pre-owned vehicles are priced out of range, that’s a problem for buyers – and for the economy.

The Go Auto Outlet South dealership in Alberta
The Go Auto Outlet South dealership in Alberta | Photo: Go Auto Outlet South

We are now seeing signs for optimism. The month of June saw used-car prices show their biggest monthly drop since the early days of the pandemic. Average prices fell by 4.2 percent over the past month in the United States. 

If this trend continues, it will also have an effect on inflation, rising vehicle prices being one of its most important drivers, as measured by the consumer index. 

Among the forces pushing the decline, rising interest rates and incentives put forward by manufacturers to sell off their stocks of new cars, both which are suppressing demand on the pre-owned market. As a result, prices at auctions that feed dealers’ used inventories are falling. 

Prices have also been stabilized by growing inventories of used vehicles at dealerships. Those stocks had  been depleted following pandemic-related factory closures and subsequent shortages of microchips and other parts, which led to owners holding on to their vehicles longer, and to runs on used vehicles that were out there on the market.

The Nationwide Auto Finance dealership in Ohio
The Nationwide Auto Finance dealership in Ohio | Photo: Nationwide Auto Finance

Chris Frey, senior director of economic and sector information for Cox Automotive Group (owner of Manheim, the world's largest vehicle auction house), said that buyers seem to have taken a break since the beginning of the summer. He added that with retail used vehicle inventories climbing in recent weeks, he expects less volatility in wholesale prices until the end of the year.

In this age, of course, we know better than to assume anything. There are many imponderables coming into play that could influence the market; it's difficult to know whether the downward trend in pricing will continue. 

The experts are optimistic and so are we, but time will tell.

Daniel Rufiange
Daniel Rufiange
Automotive expert
  • Over 17 years' experience as an automotive journalist
  • More than 75 test drives in the past year
  • Participation in over 250 new vehicle launches in the presence of the brand's technical specialists