National Motorists Association Blog

By Lauren Fix

Here’s some good news for anyone shopping for a used car. Used car prices are falling fast. According to the Manheim Used Vehicle Value Index, which tracks wholesale used car prices sold at Manheim auctions, prices fell 4.2% in June compared to May, which is the largest drop since the pandemic began. If you compare it to a year ago, they’re down 10%. We think that used prices could be dropping because as new car inventory goes up, more people are deciding to buy new cars instead of a used one.

The car buying and selling market is always fluctuating. This month the average car prices are now holding steady at or below sticker for new cars. However, the average new car cost is $251 more in May than in April. New car prices have essentially stayed flat for three months. That sounds like great news after two years of chaos and bad headlines. But these prices are out of reach for so many people. So what happened in June?

The average new car price hit $48,808 in June, that’s about $500 more than May. Price continue to rise on new cars.

The covid pandemic and resulting lockdowns issued a knockout blow to auto buyers, who saw used-car prices skyrocket.

From January 2021 to January 2022, for example, used-car and -truck prices rose an average of 40.5%, according to the U.S. Bureau of Labor Statistics.

But that was then and this is now, and auto consumers are finally seeing some slivers of sunlight in summer 2023.

Used-vehicle data shows the  U.S. wholesale used-vehicle prices fell 4.2% in June, according Cox Automotive.

Meanwhile. used-auto prices fell 10.1% in the first half. And used-vehicle prices have fallen for three straight months.

The primary factor for the price drop: Global supply chains are stabilizing, which is moving vehicles and auto parts at a faster clip in mid-2023, the Manheim Report stated.

iSeeCars analyzed over 1.8 million used cars from June 2022 and June 2023 to identify which models have the largest price drops. The Tesla Model 3 had the biggest price drop over the past 12 months – down 30.5 percent ($16,258) – while the average used car is down only 3.6 percent ($1,237). “Pricing for used electric vehicles, led by Tesla, has simply collapsed in 2023, falling farther and faster each month since January,” said iSeeCars Executive Analyst Karl Brauer.

As the inventory balances between supply and demand, the outlook for both new and used cars and trucks looks promising. “The wholesale market story for the first half of 2023 can be summed up in one word: volatile,” said Cox Automotive Chief Economist Jonathan Smoke.

“The result, however, is not unexpected. Larger upswings during the first quarter and a downward trajectory that began in the second half of March have brought us to roughly where we expected to be at this point in the year. The good news is that the worst of this is likely behind us. Used retail sales held steady in June and are showing signs of strengthening – inventory levels are generally balanced between supply and demand.

Sports vehicles saw the largest price declines, 14.8%, from June 2022 to June 2023. Pickup-truck and van prices slid 6.6% and 6.8% respectively. Compact and midsize vehicles fell 6.6% and 6.7%.

All in all, vehicle consumers should see prices ease as supply chain issues ease and demand for used cars and trucks remains relatively low.

“End-of-year expectations for the Manheim Used Vehicle Value Index, which tracks car prices, have been downwardly revised, mainly based on the decreases already seen year to date,” the report noted. “Instead of being up 1.6%, Cox Automotive now forecasts the index will be down 1.1% year over year in December.”

There could easily more issues on a global level that could change the new and used car supply chain, we will be watching to see the impact and report to you as we we know.