Trade-in volume will continue to drop as new-car sales fall amid rising interest rates intended to quell inflation.  -  IMAGE: Getty Images/halbergman

Trade-in volume will continue to drop as new-car sales fall amid rising interest rates intended to quell inflation.

IMAGE: Getty Images/halbergman

Used-car market watchers talked caution at the Used Car Week gathering in San Diego last week, Automotive News reported.

After several years of robust sales as new-car prices ballooned due to pandemic-fueled inventory shortages and supply-chain issues, used-car activity could wane significantly in light of a potential recession, dealers and market experts said.

Trade-in volume will continue to decrease as new-car sales fall amid rising interest rates intended to quell inflation, so dealers should focus on sourcing preowned models, one dealer group executive told the publication.

The slowdown will affect used-car sales more than new, one expert said, because buyers with poor credit tend to go the preowned route and interest rate hikes tend to particularly impact the subprime segment.

Wholesale used-car prices have fallen sharply from the records set last year and will likely continue to fall, though more gradually, one expert said. Dealers should stick to best practices to ride out the transition to more of a prepandemic-style normal.

READ MORE: With More New Cars Available, New and Used Vehicle Prices are Coming Down

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