Why Are Used Car Prices Dropping so Quickly in 2023 – and is it a Sign of Good Things to Come?

If you’ve been trying to buy a car in the last two years, you’ve likely had difficulty just finding the vehicle you want. That’s because of limited new car supply and rapidly fluctuating used vehicle prices and availability.

But how did that happen, what are the current prices at used car dealers looking like, and is the recent drop in car prices actually a good thing?

The Rise and Fall of Used Car Prices Amid Pandemic Problems

Due to issues like microchip shortages and the temporary shutdown of manufacturing plants to comply with pandemic social distancing and public health concerns, the number of new cars made in 2021 and 2022 was the lowest in roughly a decade.

This caused everyone, from new car buyers to companies using fleet vehicles, to turn to used car dealers for vehicles – creating supply issues for used vehicles and driving the price so far up that people were priced out of the used car market in early 2022.

But from late 2022 into 2023, used car prices have dropped an average of 8% – 15% or higher for used cars over five years old. How did that happen?

What Caused the Fall?

There are three main reasons: increased new vehicle availability, high-interest rates and inflation, and used car prices themselves.

As new vehicle manufacturing has stabilized in mid to late 2022, people who had to settle for used cars are back to buying them new. This decreases demand for used cars and prices at used car dealers.

With inflation hitting its peak in April 2022 and interest rates the highest some experts have seen in their lifetime, the prices of used cars had to be decreased just to maintain affordability.

And lastly, used car prices have been so high recently that many can afford a new car before a used one. As execute vice president of AutoLenders, Greg Markus, said, “There was nowhere for these prices to go but down.”

Now that they have, what does this mean for the future of used car dealers and buyers?

The Future for Car Dealers and Buyers

Going into 2023, used car prices are lower, but interest rates are high, and income needs to be improved for the average American who wants to buy a vehicle. This likely won’t change throughout 2023, which leaves the road ahead bumpy for the used car market.

The Good News

But there is some good news: things have started getting better already! It’s just a matter of finding the right dealership to work with.

Smart car dealers have seen where 2023 is heading and acted accordingly – all you have to do is find the dealers that offer competitive trade-in values, low-interest rates, and a full showroom. Don’t be afraid to shop around and buy a used car now that prices are dropping!

This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.

Facebook Comments Box

Leave a Reply

Your email address will not be published. Required fields are marked *