Change is in the mix as used vehicle values have dropped over the last consecutive months.
This is welcome news to many car buyers. However, used vehicle prices remain higher than before the COVID-19 pandemic and analysts predict this could remain the case for years to come.
Still, used vehicle prices now appear to be following the normal seasonal pattern, where prices peak in the spring and get lower as the year goes on.
Used-vehicle auction data from ADESA U.S. Analytical Services supports this. It shows wholesale prices at dealer-only auctions declined through September 2022 for four consecutive months, since a seasonal peak in May.
This trend presents some hope for used auto buyers who may find better prices in late 2022.
“This fall is going to be inventory cleanup time,” as dealerships sell off used vehicles they stocked up on earlier, Jonathan Smoke, chief economist for Cox Automotive, told Forbes.
Smoke noted he expects used vehicle retail prices to show more declines in Q4 than the industry has seen all year.
For a time, unprecedented demand for used vehicles, compared to supply, drove up prices to a point where some vehicle models actually appreciated in value. In fact, some used vehicles sold for more than their MSRP new.
The pandemic and a resulting shortage in semiconductor chips hurt new vehicle sales and production. With lower inventories, buyers turned to used vehicles for their vehicle needs. This pushed prices up and strained used vehicle inventories too.
A slowdown in production during and after the pandemic will also drive a shortage of used vehicles in the future. Higher interest rates also will push more new car shoppers into used cars to find a more affordable alternative. These trends will keep used car prices elevated for years to come.