3 charts that show why car prices are still near record highs
3 charts that show why car prices are still near record highs
Strong sales numbers in the new car market are finally slowing down consumer demand for used cars. As vehicle manufacturers responded to new and used car inventory shortage by accelerating production in the first half of 2023, many consumers who had been holding off capitalized on the opportunity to finally buy a new car. This surging demand for new cars consequently cooled demand in the used car market, as inventory rose, sales slowed, and prices fell for the first time this year.
Using its PricePulse data set, CoPilot measures the difference between what any used car price would have been today, if not for the extraordinary dynamics of the past two years, versus how much it is actually worth now, at retail.
Used car prices fall for first time this year, still hovering near peak
As of July 1, 2023, CoPilot's Return to Normal Index found that used car prices are hovering near peak pricing levels – but falling for the first time in five months – after seeing significant price increases in the earlier part of 2023. Used cars were listed at an average price of $31,969 in June, falling by just $66 since May. On average, used cars have a Price Premium of $8,037 (or 34%) above projected normal levels.
This is a result of new car supply finally rebounding, as dealers responded to ongoing inventory shortages by producing more vehicles in Q2. This jump in supply sent consumers who had been waiting to buy a car to the new car market, rather than to the used car market, particularly the 1-3 year old cars that consumers have relied upon as a substitute for new vehicles throughout the pandemic. As a result, demand has finally started to cool in the used car market, particularly among the most expensive vehicles that drove the increases in the used car market in early 2023.
Nearly new cars lead used car market price declines
Overall price declines were led by nearly-new (1-3 year old) cars, which fell in price by $500 in June, after jumping by 5% in the first half of the year. The Premium for nearly-new vehicles also dropped by 5%, as consumers, who traditionally turned to these cars as substitutes for new cars during the pandemic, instead bought new vehicles as supply finally replenished. While nearly-new sales increased by 5% month-over-month, inventory was able to keep pace, increasing by 7%, paving the way for dealers to continue to lower prices for vehicles in this age bracket.
In June, preowned (4-7 year old cars) had an average listing price of $28,500, a $242 decrease from May, and down $498 from April. The Price Premium for pre-owned cars was $7,417 (or 35%) above projected normal levels, a $92 decrease since April. Older (8-13 year old) used cars had an average listing price of $17,313, an $85 decrease from May. In the first half of 2023, older used car prices have slowly and steadily declined, peaking for the year in February at $17,727, and falling by a total of $354 in the subsequent five months.
SUVs lead price surge, up a staggering 9% in three months
In June 2023, used SUVs were listed at an average price of $43,525, down by just $26 since May, but dropping in price for the first time in 2023. Before reversing course and falling this month, used SUVs showed substantial price increases between January and May, up $3,400 (or 8%) in that five-month period. As these vehicles hover near peak prices, sales finally slowed this month – potentially indicating consumers are reaching their limit for paying near-record high prices for some of the most expensive vehicles on the market.
Bucking this trend of used car price declines, however, are used minivans, which have increased in price by 7% since February. Now with an average listing price of $25,092, used minivans are currently priced $7,464 (or 42%) above projected normal levels.
This story was produced by CoPilot and reviewed and distributed by Stacker Media.
