Used car prices down 5.7% in first half as market slows (2024)

FAQs

How fast is the used car market dropping? ›

Average price of a new and used car in US

The average price of a used vehicle — $27,297 as of last month — is down 3% from a year ago and 12% below the peak of $31,095 in April 2022. Analysts expect used-auto prices to fall further before rising slightly once the peak buying season resumes in the spring.

Improvements in the supply chain ought to bolster inventory, while interest rate cuts are on the horizon. "It's going to be a much better time for a consumer to buy a car in 2024 versus this year," said Paul Waatti, an industry analyst at market research firm AutoPacific.

New vehicle sales in the U.S. are on pace for a seasonally adjusted annual rate of 15.8 million in 2024, Cox Automotive said in a press release Monday. While the seasonally adjusted annual rate was down slightly from the 15.9 million units sold in December, it's about 0.7 million units ahead of January 2023.

What's the best time to buy a used car? Used and new cars follow similar cycles. If you're shopping for a used car, the early months of the year — January and February — are a good time to ship. You may see more vehicles on the market then as people sell their old vehicles after buying new ones over the holidays.

Used vehicle prices are falling in part because high auto loan rates are scaring away potential buyers. In a separate report on Friday, Jonathan Smoke, chief economist at Cox Automotive, said that “demand is tepid at best, as shoppers just don't have any urgency to buy in the current economic environment.”

Retail new-vehicle sales are forecast to be mostly flat in the year ahead, with fleet sales continuing to improve, although at a pace slower than 2023. In 2024, the used-vehicle market is expected to grow by less than 1%.

Retail used car prices are falling slowly in 2024

In late 2023, retail used car prices eliminated the year's overall gains, returning to where prices were when 2023 began. In early 2024, used car prices are holding steady, even as new car prices drop quickly.

Car prices could fall by about 7% by 2025, providing some much-needed relief for car shoppers after years of jacked-up prices, according to consultancy AlixPartners. But the drop won't be the result of individual vehicles getting cheaper.

Since January is the slowest month for sales, it is much slower for luxury cars to sell. Because of this, it may be more challenging for the most expensive ones to be taken out of your parking lot. To sell out the most expensive ones in your inventory, January is the best time to offer promotional deals to the buyers.

What is an average car payment in 2024? ›

Experts say that 2024 will be the best year to purchase a new car since 2019. As interest rates slowly drop throughout the remainder of the year, payments will become more manageable. Don't overlook manufacturer rate promotions, as they can save you thousands of dollars.

Dealerships don't want you to pay cash because they don't earn a commission on arranging financing. If you qualify for in-house financing, the profits they miss out on increase since they don't have to work with a third-party lender.

For decades now, car salespeople have constantly gone to “talk my manager” for permission to negotiate during the sales process. This tactic, paired with countless other dealer antics is very frustrating for customers. If you're unfamiliar with your salesperson saying “let me go check with my manager,” you're lucky!

Paying cash may hinder your chances of getting the best deal

"When dealers are negotiating the purchase price, they anticipate making money on the back end, via financing," Bill explains. "So if you tell them up front you're paying cash, the dealer knows he has no opportunity to make money off you from financing.

Used vehicle prices will fall 5.7% in 2024, expert says

Despite the decline, consumers are still paying roughly 20 percent more for used vehicles than before 2020, Banks said. Prices averaged about $24,100 in 2019 and are at about $31,400 today.

If you're planning to finance your car, you'll be more likely to get a lower interest rate on a new car than a used one. New cars have a higher resale value and are less likely to have mechanical issues. That means the lender is less likely to lose their investment if you can't make your payments.

Despite that, prices are still higher than they should be, as a new iSeeCars study found that the average new car is priced above MSRP, though they're slightly less painful than they were a year ago.