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Would-be used-car buyers could be in for a rude awakening on dealers’ lots

Henry Epp Oct 12, 2023
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Used car prices are dropping. But if you haven't been in the market for a used car since before the pandemic, prices might still shock you. Scott Olson/Getty Images

Would-be used-car buyers could be in for a rude awakening on dealers’ lots

Henry Epp Oct 12, 2023
Heard on:
Used car prices are dropping. But if you haven't been in the market for a used car since before the pandemic, prices might still shock you. Scott Olson/Getty Images
HTML EMBED:
COPY

The latest consumer price index shows that the price of used cars and trucks dropped 2.5% last month. Compare the price to a year ago, and it’s even lower — 8% to be precise. Prices have continued to fall from the historic highs of early 2022, when those chip shortages cratered the supply of new cars and drove a bunch more buyers to the used market.

But if you’re shopping for a used car now for the first time since before the pandemic, you’re likely in for some sticker shock — and the market is facing pressures that could keep those prices high for a while.

Matt Van Wagner of South Burlington, Vermont, needs to replace his car.

“We’ve got a 2006 Cadillac DTS with about 196,000 miles that moans and groans more than I do in the morning,” he said.

He wants to find a used car to replace it — ideally, something only a few years old and in the $15,000 to $20,000 range. But the options just aren’t great.

“I’m stuck in the mentality that used cars should be a lot cheaper than what they are,” he said.

They’re not likely to get much cheaper. For one, there’s just not enough supply, because we’re still seeing the effects of those chip shortages and shutdowns related to COVID-19 that threw a wrench in the production of new vehicles, said Chris Frey with Cox Automotive.

“I liken it to a boa constrictor that swallowed, let’s say, a pig,” he said. “And if you turn it upside down, that visual of the pig going through the snake? That’s the hole in new production that we have to work through.”

That hole has caused buyers of new cars to behave strangely, said Jessica Caldwell, an analyst at Edmunds.

“They’re either going to hold on to their vehicle, they’re gonna buy out their lease, they’re going to do things they wouldn’t typically do,” she said.

That’s kept the supply of used cars tight. And it could get tighter if the UAW strikes create another hole in production. 

Meanwhile, demand isn’t going away, even as interest rates for used car loans topped 11% in the third quarter, according to Edmunds. A lot of people have no choice but to drive.

Kevin Hicks, general manager at Garceau Auto Sales in Champlain, New York, said he sees that in his shop.

“People are coming in that absolutely need a vehicle, not just because they want it,” he said.

Still, Hicks said he’s been able to keep his inventory pretty healthy, thanks to his dealership’s location, just a couple miles from the Canadian border.

“I have an alternate route I can buy out of Canada,” he said. “There’s plenty of supply in Canada as far as used vehicles.”

Can any of our neighbors to the north let us in on your supply secret?

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