Thelife- The used car market took off during the COVID-19 pandemic.
- Shoppers had to shell out a lot of money for cars they could've gotten cheap just three years ago.
Shoppers might finally be starting to see the light at the end of the tunnel in the used vehicle market, but only for certain types of cars.
You might be in luck if you're looking for better prices in some used segments. As of last month, used pricing had declined nearly 4% year-over-year, according to Cox Automotive's latest Manheim Used Vehicle Index, with one exception: Trucks.
Used compact car pricing in September was down nearly 10% year-over-year, while used midsize cars and luxury vehicles saw 5.9% and 6.7% drops, respectively, in pricing, according to Cox.
Used SUV and van pricing fell 3.5% and 2.3%, respectively, year-over-year, Cox said.
But pickup truck pricing remains resilient and was actually up almost 1% from last September. That's largely due to their use for work.
Overall, despite slight improvements in the used car market from 2020 and 2021, supply remains tight for used cars today, according to Cox, and is tighter than this same point both last year and pre-COVID.
Used vehicles were still listed for $26,717 on average at the start of October, Cox reported — considerably pricey. Used inventory sat at 47 days' supply at the end of September, down from 54 days one year earlier.
Used car dynamics
The pandemic broke the used car market, and there is no "normal" for this market to return to.
Supply is down significantly as people hold onto their cars for longer, options are incredibly limited as fewer drivers return their leases to the market, and given the sky-high costs in the new car space, buyers are settling for much older used vehicles with much more mileage.
In fact, $23,000 could have bought an average three-year-old car in 2019, a recent iSeeCars study said. Now, that won't even buy a vehicle twice as old. A budget of $20,000 won't go nearly as far as it used to.
It's likely there won't ever be a dramatic drop in used car prices.
The ongoing UAW strike could also eventually threaten used car prices.
"Currently, the UAW strike has only had a minimal effect on the auto market," Cox senior manager of economic and industry insights Chris Frey said in a release. "However, if the strike continues or is expanded, it could potentially have more of an impact on the wholesale and, ultimately, the retail used-vehicle market."