Used Car Prices Increase at Unsustainable Rate in March, Making it One of the Worst Times in History to Buy
“Red alert” for used car buyers as retail prices of America’s favorite family cars – SUVs and minivans – surge by $2,100 in just six weeks
Used electric vehicles – down by 2% since February – represent one of the only bright spots in the market for consumers
Consumers in the market for a used car should wait a little longer: While it is currently one of the worst times to buy, CoPilot predicts used car prices will fall in the coming months
Chicago, IL – April 4, 2023 – Used car prices surged in March, jumping nearly $900 to an average of $31,492, according to the monthly Return to Normal Index Report from leading car shopping app CoPilot. With the vast majority of age brackets, segments, and brands increasing in price – combined with yet another interest rate hike from the Federal Reserve in March – the current moment is one of the worst times in history to afford a used car.
With used car inventory at its lowest levels in more than two years, dealers have been forced to bid high at wholesale auctions to restock their supply, which drove up wholesale prices, as widely reported by the Manheim Used Vehicle Value Index. Dealers passed this along to consumers by raising retail listing prices of their high-priced inventory accordingly.
Used car buyers surveyed by CoPilot in March also reported their lowest dealer transparency scores in six months, driven by a surge in hidden fees, which dealers add to pad their profits. Regardless, used car sales continued to increase in March, up 7.5% year-over-year, as consumers flocked to dealerships, flush with tax refund checks.
The price increases in the used car market are largely driven by 1-3 year old cars, whose prices jumped by a staggering $1,100 in March to an average of $41,120, near all-time highs. Used SUVs and minivans, a popular main choice for American families, have seen especially significant price jumps recently, with prices up by more than $2,100 (or 5%) in the past six weeks alone.
“Used car prices have increased at a breakneck and frankly unsustainable rate, especially in the past month,” said Pat Ryan, CEO and Founder of CoPilot. “Almost all parts of the market have seen substantial price increases, as dealers have passed rising wholesale costs on to the consumer. Compounded by ongoing interest rate hikes, there’s never been a worse time to buy a car, whether you’re taking out a loan or buying in cash.”
Used electric vehicles present a rare favorable buying opportunity, as the EV market sees increased competition and more consumers take advantage of federal tax credits on new models, keeping used prices relatively low. Used EVs – now averaging $46,668 – have steadily decreased in price since July 2022, and fell by another 2% (or $813) in March. Indeed, in the wake of January price cuts on new Tesla models, used Teslas – currently priced $4,087 (or 9%) above projected normal levels – remain the mainstream brand closest to returning to normal levels.
So what’s the good news? Across the broader used car market, there are early signs that prices will soon fall. The March price increases largely took place in the first half of the month, and have already slowed. For instance, 1-3 year old cars increased in price by nearly $900 in the first half of the month, but nudged upward by only $200 in the last two weeks – indicating that drastic price increases are already starting to cool.
“As tax season comes to a close, and with recent data showing that consumer confidence is waning, dealers will not be able to continue to raise prices indefinitely, especially not at the rate we saw last month,” Ryan added. “If you’re in the market for a used car, wait a little longer if you possibly can. The used car market will soon peak, and consumers will start to see more affordable prices at the dealership as we enter the summer months. When you do buy, make sure to focus on the all-in or out-the-door price. Don’t let the dealer add bogus hidden fees to clawback a lower listing price or the discount you just negotiated. And if you really cannot wait, one tip would be to consider a Lexus, as these are top quality cars that hold their value for good reason, and one of the only mainstream brands where we see used inventory already rising.”
CoPilot is a leading, data-driven car buying app that provides consumers with an expert partner for high-consideration purchases, starting with car buying and ownership. The platform combines powerful data backed by human expertise to introduce transparency to the shopping, purchasing and ownership journey. The mobile application takes the time, frustration, and guesswork out of the process, empowering people to easily navigate the risks of shopping for high-value items, and to buy with confidence at the right price and the right time.
CoPilot provides free pricing tools for consumers. Price Pulse makes it easy for car shoppers to check the current market value and Price Premium for any car, track price changes, and compare years and models to choose the right car and know when to buy. For car owners and sellers, Price Pulse calculates the real-time value of their car, using the same data only dealers used to have, allowing consumers to track how much their vehicle has appreciated, so they can decide whether and when to sell, or negotiate the best deal at trade-in or lease-end.
For media publishers, CoPilot offers free, embeddable data tools, including Price Pulse market trends, allowing journalists and bloggers to integrate interactive charts and tables within their web content, apps, or newsletters, powered by CoPilot’s unique data and analytics.
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