This content has been reviewed and updated on June 4, 2024.
It’s been a wild few years in the used car market. During the COVID-19 pandemic, used car prices skyrocketed, and if you deal in used cars, you may have enjoyed the shift. But is that price shift here to stay, or are used car prices dropping significantly sometime soon?
Used car prices have already fallen from the pandemic highs. However, automotive industry forecasts expect prices to continue fluctuating for the foreseeable future. Moreover, we may not see prices drop to pre-pandemic levels for a very long time, if at all.
Below, we discuss the current state of the used car market, inflation, and what experts predict for the rest of 2024.
What Can We Expect for Used Car Prices in 2024?
A common question from vehicle shoppers during the pandemic: When will used car prices drop? The answer turned out to be 2023.
In 2023, used car prices were on a downswing. Between September 2022 and March 2023, used car prices fell 4.7%¹. Year-over-year, the auto industry saw used car prices dropping by 7% in 2023, slightly below JP Morgan’s prediction of a 10% drop in used car prices². Despite this drop, prices were still higher than the pre-pandemic level³.
“We’ve most likely passed the peak of prices,” says Alex Yurchenko, chief data science officer at Black Book⁴. Yurchenko notes that pricing is complicated. “There are a lot of nuances to it,” he says, “We’re starting so high that we’re not going to get to the pre-COVID level any time in the foreseeable future.”
At the end of 2023, the average price of a used car was $28,371, 4.4% less than the average a year earlier⁵. New and used car prices continued to fall in the first quarter of 2024. Industry experts predict that used car prices could decrease by as much as 14% on average by the end of 20246.
Are Car Sales Down in 2024?
According to Fortune, new vehicle sales are on the rise in 2024. Between January and March, sales of new vehicles went up almost 5%. Electric vehicle sales, however, are down in the first quarter of 2024⁷.
Rising new vehicle sales will bolster the supply of available used cars. People who were holding onto their vehicles during the inventory shortages will increasingly sell or trade in. This increased supply may not make used cars much more affordable though. High interest rates and ongoing high prices will keep some shoppers out of the market. Many consumers cannot afford to purchase a vehicle, even though inventories are higher now than in recent years.
How to Deal With Changes in the Used Car Market
Because the automotive market will always fluctuate, it’s important to have a few creative strategies in place to maximize your available inventory and customer base.
Focus on the Inventory You Have
If your bestsellers are in short supply, focus your attention and advertising budget on those that are available. Now is also a good time to be agile with your dealership’s online advertising campaigns.
Take Control of Inventory Sourcing
Wholesale online dealer auctions allow you to source nationwide, offering convenient transportation services so you can efficiently zero in on the inventory you need. You can also consider thinking outside the box to acquire inventory—look for trade-ins, lease buybacks, or maybe even buy used cars from past customers.
Create a Specific Target Customer Persona
Sometimes marketing campaigns can be too broad. Consider more specifically targeted audiences. Be creative when thinking about these audiences. Can you run a specific campaign for lease buybacks? Trade-ins? Focusing on these specific audience subsets can help you advertise more efficiently.
Utilize Vehicle Servicing
A shortage of vehicles in your inventory doesn’t mean a shortage of maintenance needs. Offering deals on routine maintenance and repair stops is a no-brainer in leaner moments. Consider highlighting services that you offer on social media and your website.
Grow Your Business With ACV Auctions
A wholesale auto auction is one of the most efficient ways to get your hands on high-quality new and secondhand vehicles. Join ACV Auctions today to source the best vehicles nationwide and buy with confidence thanks to the platform’s industry-leading vehicle condition reports.
Sources
- Vaughn, M. (23 March 2023). Used-Car Prices Are Finally Dropping. Autoweek. Retrieved May 28, 2024, from https://www.autoweek.com/news/industry-news/a43377799/used-car-prices-are-finally-dropping/
- Inflation and the Auto Industry: When Will Car Prices Drop? J.P. Morgan. Retrieved May 28, 2024, from https://www.jpmorgan.com/insights/research/when-will-car-prices-drop
- Subramanian, P. (8 January 2024). Used car prices tumble 7% in 2023, though still elevated compared to pre-pandemic. Yahoo!Finance. May 28, 2024, from https://finance.yahoo.com/news/used-car-prices-tumble-7-in-2023-though-still-elevated-compared-to-pre-pandemic-205704515.html
- Ceppos, R. (8 March 2022). When Will Car Prices Come Back to Earth? Car and Driver. May 28, 2024, from https://www.caranddriver.com/news/a39357957/car-prices-high-when-will-change/
- Sola, A. T. (21 March 2024). Auto prices are cooling, but ‘we’re never going back to the old normal,’ expert says. Here’s what car shoppers can expect. CNBC. May 28, 2024, from https://www.cnbc.com/2024/03/21/new-used-car-prices-are-cooling-heres-what-auto-shoppers-can-expect.html
- Grieve, P. (9 April 2024). Used Car Prices Could Decline 14% as Inventory Rebounds. Money.com. Retrieved May 28, 2024, from https://money.com/used-car-prices-decline-prediction/
- Krishner, T. (3 April 2024). New vehicle sales in the U.S. rose nearly 5% in 2024 as buyers defied high interest rates, but EV sales growth slowed. Fortune. Retrieved May 28, 2024, from https://fortune.com/2024/04/03/new-vehicle-sales-us-rose-ev-sales-growth-slowed/
