Image courtesy of David Paul Morris via Bloomberg and Getty Images.
The price of used cars appears to be locked in high gear, despite the fact that customer demand is falling.
According to CoPilot, a vehicle purchasing software that analyzes dealership prices throughout the country, sales of used cars less than 10 years old were down 27 percent last month compared to the same month in the previous year. During the same period, the average price increased by 40 percent to $33,653 dollars.
According to CoPilot data, sales of practically new automobiles — those that are one year to three years old — were down 31 percent in March compared to the same month a year earlier, but the average price of $41,000 is 37 percent higher. Prices for this age group fell by about 3 percent in the first two months of 2022, before rising again in March as a result of ongoing manufacturing issues for new automobiles and uncertainty due to the ongoing conflict in Ukraine, according to the latest figures.
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Consequently, people are taking their time when purchasing a secondhand automobile. Because of this, dealer stocks of 1-year to 3-year-old automobiles have returned to pre-pandemic levels, with the average time spent hunting for one increasing by 93 percent to 171 days from 89 days in March 2021.
Nevertheless, according to CoPilot, prices are not dropping because dealers continue to face a shortage of new vehicles, resulting in many prospective new-car buyers opting to purchase a used vehicle instead.
As a result of practically empty new vehicle lots throughout the country, dealers have been able to maintain high pricing on newer used automobiles, according to CoPilot CEO and founder Pat Ryan.
When there was no pandemic, approximately 76 percent of automobiles would sell for less than $25,000. Automobiles in this price range now account for only 35% of the total available inventory. Meanwhile, vehicles priced above $40,000 account for 25 percent of what is available on dealer lots, compared to 5 percent in a typical year of inventory.
As Ryan points out, “the silver lining to the continuation of high car prices is that it provides consumers who have an extra car to sell an opportunity to cash in on record-high prices,” Ryan said.
His advise to those who possess old automobiles is to take advantage of this “once in a lifetime” trend and sell their vehicles at a profit, according to him.