The used car market has seen significant shifts and changes in recent times. With evolving consumer preferences, technological advancements, and changing economic conditions, the used car market is a dynamic and competitive landscape. On today’s Inside Automotive, we’re pleased to welcome Executive Analyst for iSeecars.com, Karl Brauer, to provide his in-depth knowledge of current trends and insights.
The used car market
Over 12 months, in 2022, the average slightly used car price has been reported by iSeeCars to be 8.5% above the equivalent new car. However, Brauer says, “Now it’s 8.1% below the new car equivalent or $3,700 below MSRP.” Brauer asserts he sees that as a healthy change in the market, especially for consumers.
“The business model is returning to a ‘normal’ market, but the market has shifted,” claims Brauer. For instance, the industry is witnessing EV pricing shooting all over the place. Even in the used market, vehicles like the Ford Maverick are incredibly high value, low in price, and come with the standard hybrid powertrain to grant great mileage when gas is at high rates. But, high-value cars are still priced over MSRP.
Although used car prices have been declining, according to iSeeCars, “it’s the action prices that have increased in the last 60 days.” The prices on the retail are said to remain unchanged, which means compression of profit for dealers. To illustrate further, dealers must spend more money getting scarce vehicles from auction centers.
According to Brauer, the market is fragmented. There are still some vehicles, like the Maverick, where demand exceeds supply. Then again, there are vehicles with low demand and plenty of supply. There are now more than 20 models available with MSRP discounts of 20% or more. “That should be normal, but it’s being seen as a big deal,” continues Brauer.
In comparison to pre-pandemic prices, everything is relatively high. Prices are still up, and everything is comparably expensive. But some deals weren’t there for the past two years. “This is where research is everything,” adds Brauer. When good deals are everywhere, you can take the lazy research approach; when good deals are nowhere, you can remain lazy. “It doesn’t matter the research; you’re still going to pay a lot of money. The answer to finding the mixture of good or bad deals lies at the buyers’ fingertips,” emphasizes Brauer.
Ultimately, it will be a balancing act for the automotive industry this year and in the following years. What once was a number-driven predictive market is now constantly faced with a disruptive economic timeframe. By 2024, Brauer forecasts to see prices being pushed down, and the industry will see the most significant turmoil will be the reason why prices decrease.