Used car prices are expected to make a slight recovery over the course of 2024, reversing course after two consecutive years of sharp declines stemming from the COVID pandemic.
Cox Automotive forecasts wholesale used car prices will rise 0.5% year-over-year by December, following a 7% drop in 2023 and a 15% drop in 2022. Although the improvement is marginal, the company expects the 2024 pre-owned vehicle market to be relatively stable as inventory, demand, and affordability trends shift back toward pre-pandemic norms, benefitting both consumers and dealers who have struggled with unpredictable conditions since 2020.
While used car prices have fallen drastically from their peak in the wake of resumed new vehicle manufacturing, pre-owned values remain higher in 2024 than before the pandemic. Cox Automotive recorded an average listing price of $26,091 in December 2023, a decline of 3.9% and 7.5% from 2022 and 2021, respectively. However, pre-owned vehicles remain roughly 30% more expensive compared to typical 2019 listing prices.
Even though a slow recovery is better than no recovery, dealers will still be challenged to improve over the previous year’s performance in terms of volume and profits. Although used car prices have fallen substantially from their pandemic-era peak, pre-owned sales are only expected to rise less than 1% in 2024.
This means used car retailers will need to pursue aggressive sales strategies that allow them to compete for customers in addition to careful budget allocation. Tactics that lower costs of acquisition, such as non-auction, trade-in, and other multi-channel routes, or tools that allow buyers to easily search and obtain quotes for models on dealership websites will be essential to building stable levels of supply and demand in the coming months.