CoPilot’s Return to Normal Index
July 6, 2022 Report
EXECUTIVE SUMMARY: JUNE 2022 DATA
CoPilot’s Return to Normal Index shows the differential between what any used car would have been worth today if not for the extraordinary dynamics of the past two years, versus how much it is actually worth now, at retail. As it tracks this differential over time, the Return to Normal Index provides the only real-time barometer of the used car market’s recovery, as well as how close individual vehicle segments, brands, and age brackets are to returning to normal pricing levels.
As of June 30, 2022, CoPilot’s Return to Normal Index found:
- Average used car listing prices increased to $33,341, a 0.5% month-over-month increase, and just $172 below the used car market’s peak in March 2022.
- Overall, used car prices are now $10,046, or 43%, above their projected normal levels – a new all-time high for the Index.
- Despite economic headwinds caused by inflation, interest rates, and fuel prices, the continued inventory shortage in the new market, as well as strong consumer demand, are driving overall used car prices to near-record highs. These increases in listing prices show that dealers are still holding out for record profits while they can.
PRICE PREMIUM BY VEHICLE AGE
The most relevant factor for car price behavior is vehicle age. With new cars still in very short supply, nearly-new (1-3 year old) cars are the next best substitute, and thus are experiencing excess demand. This demand continues to support record-high prices, despite economic headwinds in financial markets. Outside of 1-3 year old vehicles, the older the vehicle, the closer its price to normal levels – although all still have a long way to go.
In June, nearly-new (1-3 year old) cars were listed at an average price of $42,314, an all-time high and a 1% increase of $426 over May. With new car supply increasingly constrained, and sustained by strong consumer demand, the 1-3 year old market remains extremely competitive.
- In June, the Price Premium for 1-3 year old cars was $13,145, or 45%, above projected normal levels.
- This shows a slight uptick from May, when the Price Premium for this age bracket was 45% above projected normal levels.
Pre-owned cars (4-7 years old) showed a slight strengthening in price in June. The listing price of 4-7 year old vehicles was $29,841, an increase of 0.5% or $163 above their May prices.
- The Price Premium for 4-7 year old cars in June was $9,086, or 44%, above projected normal levels.
- By comparison, in May, the Price Premium was $8,810, or 42%, above projected normal levels.
Older used vehicles (8-13 years old) were the only age-segment to decline in price month-over-month. In June, the average listing price for 8-13 year old cars was $18,038, continuing a three-month downward trend with a modest $55 drop since May.
- The Price Premium for 8-13 year old cars in June was $5,416, or 43%, above projected normals.
- By comparison, in May, the Price Premium for these vehicles was $5,394, or 43%, above projected normal levels.
PRICE PREMIUM BY TYPE OF VEHICLE
Despite near-record-high fuel prices, used SUV prices, which are traditionally highly sensitive to increases in fuel prices, has shown only a modest softening since gas prices started increasing. The average June listing price of $43,422 was only 3% ($1,334) below prices in early March 2022.
- At $9,768, the Price Premium for used SUVs was 29% above normal expected prices.
- By comparison, in May, the Price Premium for used SUVs was $10,195, or 30%, above projected normal.
Used pickup trucks, another relatively fuel-inefficient segment, have also shown surprising resilience recently. As of June 30, they were listed at an average of $41,497, up $375 from early March, reflecting the strength of the consumer despite increasing fuel prices and rising interest rates.
- In June, the Price Premium for used pickup trucks was $10,114, or 32%, above projected normal levels.
- This represents a slight increase in the Price Premium from May, when used pickup truck prices were listed for $9,996, or 32%, above projected normal levels.
PRICE PREMIUM BY FUEL TYPE
Since fuel prices started to increase in early March, electric vehicles have seen some of the most significant price gains in the market. These increases are in part driven by a spike in consumer demand, but also by the limited availability of used electric vehicles, many of which are models only recently added to new car line-ups by manufacturers.
- Overall, used electric vehicles are listed at $66,742, representing a massive 26% increase since early March, when gas prices began to surge.
- Hybrid vehicles have also seen a price increase corresponding with increasing costs at the pump. Used hybrid vehicle prices are currently averaging $49,213 - a 14% increase since early March.
- The best proxy for electric vehicle demand is Tesla. Used Tesla prices have increased by about $10,000 or 16% since gas prices began to surge in early March, and by over $2,000 since May, reaching an average price of $71,041 in June. At $24,134 above normal, this reflects one of the highest Price Premiums by percentage of any brand (51%).
Electric and hybrid SUVs and pickup trucks are a small, but rapidly growing sub-segment, and are priced on average 30% higher than gasoline or diesel versions, averaging $55,131 versus $41,793.
- Prices have increased somewhat faster for electric/hybrid vehicles in these categories, growing about 2% from April to June, versus flat for other SUVs and pickup trucks. If electric/hybrid demand continues to accelerate, we might expect prices to follow.
PRICE PREMIUM BY BRAND
In June, the Price Premium for high-volume domestic brands averaged $9,752, or 42%, above projected normal levels.
- This represents an increase from May, when the Price Premium for domestic brands was $9,381, or 40%, above projected normal levels.
Used Ram vehicles had the highest Price Premium among domestic brands, listed at $11,390, or 36%, above projected normal levels.
Chevrolet, Ford, and GMC all had average Price Premiums of about $9,900 compared to their normal prices.
In June, the Price Premium for high-volume foreign brands averaged $8,088, or 45%, above projected normal levels.
- This represents a very slight increase from May, when the Price Premium for foreign brands was $7,998, or 45%, above projected normal levels.
- Used Volkswagens had the highest Price Premium among foreign brands, listed at $10,034, or 66%, above projected normal levels.
In June, the average Price Premium for luxury brands was $12,128, or 39%, above projected normal levels.
- This represents a slight decrease from May, when the Price Premium for luxury brands was $12,388, or 40%, above projected normal levels.
- Used Porsches had the highest Price Premium among luxury brands, listed at $60,124, which is $24,168 (marginally above Tesla in absolute terms) or 40% above projected normal levels.
ANALYSIS AND CONCLUSIONS
Despite a long list of worrying economic and geopolitical indicators, CoPilot’s Return to Normal Index shows that demand for used vehicles remains very strong, especially for newer and more expensive vehicles. This allows dealers to keep closing deals well above projected normal prices. This trend is driven by the shortage of new cars, by the desire by dealers to hold out for profits while they can, and by a sufficient backlog of confident buyers. Even at the low end of the market, where prices have been softening for several months, prices of cars 4 years and older are still 40% or more above projected normal levels.
CoPilot’s June pricing data shows that, despite signals of a potential recession on the horizon, used car prices remain near record highs, buoyed by ongoing inventory shortages in the new car market, as well as strong consumer demand. This month’s Return to Normal Index shows price increases for the overall market, and especially in 1-3 year old cars, which consumers have turned to as a substitute for new vehicles.
Somewhat surprisingly, despite continued fuel price surges, demand for gas guzzlers is still largely unaffected - with used SUV prices declining only slightly, used pickup truck prices actually increasing, and both segments still trading about 30% above projected normal levels. While high gas prices do not seem to have driven down overall demand, they do appear to be accelerating the shift in consumer demand towards electric and hybrid vehicles. Indeed, electric vehicle prices have reached record highs each month since gas prices started to increase in early March.
Consumers can look up the real-time value and the Price Premium for any individual car they are looking to buy, for free, at www.copilotsearch.com/pricepulse.
The Return to Normal Index is drawn from data collected by leading car shopping app CoPilot. CoPilot’s data and proprietary methodology track the online inventory of virtually every dealer in the country, every day, offering real-time analysis around car prices, inventory, and sales. This July report covers data through June 30, 2022. Data and methodology have been refined in this report, for increased sensitivity to market fluctuations. Data may adjust in future, due to changes in methodology and as additional data sources are integrated.
CoPilot has also created two free pricing tools for consumers. Price Pulse makes it easy for car shoppers to check the current market value and Price Premium on any car, track price changes, and compare across years and models to choose the right car and know when to buy: www.copilotsearch.com/pricepulse. CoPilot’s Hidden Profit Calculator allows car owners to see the real-time value of their car, and how much it has appreciated, so they can decide whether to sell, and negotiate the best price at trade-in: www.copilotsearch.com/hiddenprofit.