The used car market has rapidly transformed in recent years under the weight of the COVID pandemic and constricted manufacturing. As vehicle inventories started to dwindle, new trends began to emerge in the preowned segment.
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Karl Brauer, executive analyst at iSeeCars.com. Brauer is one of the leading customer experience experts in the retail automotive sector, evidenced by his work with major platforms, including Edmunds.com, Autotrader and Kelley Blue Book. For years, dealers have relied on his research to formulate strategies that drive success. Now, he shares his insights into the used car market and its response to the COVID pandemic.
1. Since 2019, the percentage of used vehicles listed for $22,000 has shrunk from roughly 50% to 12.4%. Used vehicles costing $15,000 have shrunk from 20% to 1.5%.
2. In 2019, $23,000 would have allowed most consumers to purchase a three-year-old used car. In 2023, the average age of a $23,000 vehicle has grown to six years.
3. Factory closures resulting from the COVID pandemic created shortages of model year 2020-2022 vehicles. When these cars eventually entered the used car market, they were already in limited supply. This has suppressed demand among consumers.
4. Used vehicle prices were beginning to stabilize in 2023. However, the United Auto Workers strike is now threatening to undo this recovery.
5. Average used car market prices will likely stay inflated for several more years. This will lead many consumers to delay their next vehicle purchase.
"Flexibility is always your friend when you're buying a car because no matter what the market is doing, if you can look at different models, different colors, different options and the key thing I would say is different locations: you can find the same model at a markedly different price between metro areas." — Karl Brauer