After three tumultuous years, used car prices are set to stabilize in 2024. Following the onset and duration of the COVID-19 pandemic, the automotive market went into a tailspin and subsequent rally. The average used car cost less than $20,000 in 2019; however, as of the end of 2021, that number had risen to nearly $28,200, an increase of about 29 percent. By the end of 2023, average prices then dropped about seven percent.
According to Cox Automotive, a vehicle market firm, their Manheim Used Vehicle Data Index predicts only a 0.5 percent increase in prices for used cars from Dec 2023 to Dec 2024. Monthly and seasonal pricing fluctuations are also expected to resemble those seen pre-pandemic. Jeremy Robb, Senior Director at Cox Automotive, stated, “2024 is looking to be less volatile than 2023, but we’ve been taught to expect the unexpected in the wholesale market.”
A major factor in the monumental rise in used car prices came from the immense material and labor shortages automakers endured during the height of the pandemic, causing a shortage in new car inventory, making the demand for used vehicles increase exponentially. In turn, the increase in pre-owned vehicle demand drove prices up to match.
Presently, the incoming market stability benefits everyone who is considering buying a used car. The caveat is that stabilized used car prices are still much higher than pre-pandemic prices because the retail market tends to follow the wholesale market; however, the retail market is notoriously slow to catch up.
New and used vehicle sales are expected to rise this year, with Cox forecasting a 1.3 percent increase for new cars and a less than one percent increase for used vehicles. While this minuscule increase is considered pessimistic by Cox Automotive, it does show a step in the right direction as a whole for the automotive market.
Jonathan Smoke, Cox Automotive’s chief economist, stated during a conference call, “For the economy and the auto market, we’re in for just 1% to 2% growth, but growth beats a recession, as we enter into 2024, new supply is back to spring 2020 levels, which favors consumers and leads to lower prices.”
There’s some good news for EV sales, with Cox Automotive expecting more than 10 percent of all new vehicle sales to be electric vehicles, up from the 7.4 percent, or 1.1 million units sold throughout 2023. While the used vehicle market seems to be slow to catch up, there is good news and hope for those interested in purchasing a used vehicle in 2024.
Based on the information here, do you think you’ll be buying used this year?
