The used car market is in a curious state as prices have continued to fall precipitously in the early part of 2024, but they have yet to reach pre-pandemic levels due to higher-than-usual demand.
Data from the first 15 days of February indicates a substantial decline in prices for wholesale used vehicles, accounting for variations in vehicle types, mileage, and seasonal factors. Specifically, prices have plummeted by 13.8 percent compared to the same full month last year, highlighting a notable shift in the market dynamics. As compared to January 2024, prices were down 0.9 percent, reports Cox Auto.
All segments saw declines, with luxury vehicles leading the drop at 13.2% compared to February 2023, followed by SUVs (13.5%), compact cars (16.9%), midsize cars (15.9%), and pickups (14.6%).
Similarly, prices were down for all major segments on a month-to-month basis. As compared to January, compact cars lost just 0.7 percent and midsize cars lost just 0.1 percent of value, while the wider industry lost 0.9 percent. However, prices in the pickup segment and the luxury segment were down 1.7 percent and 1.1 percent, respectively.
Narrowing the focus on the electric vehicle segment, it lost more value than the industry on a year-on-year basis, but less on a month-to-month basis. Cox Auto reports that EV prices were down 16.1 percent as compared to February 2023, but only 0.3 percent as compared to January.
Read: New Car Prices Fall 3.5% In January, Luxury Models And Large SUVs Impacted Most
The Manheim Used Vehicle Value Index, which measures the average values of used vehicles, showed that used cars prices are the lowest they’ve been since early in the pandemic, but they haven’t fallen down to pre-lockdown levels yet.
That’s due to continued demand and low supply. The average daily sales conversion rate in the first half of February was 59.1 percent, which is still higher than in February 2019, when the daily average was 55.3 percent — that suggests that demand is stronger today than it was then.
In addition, Cox Auto says that the supply of wholesale vehicles was tighter in the first 15 days of February than it normally is, and that the days’ supply of vehicles is significantly lower than it was in 2019, before the pandemic severely impacted the market.
That suggests consumers may need to remain patient as prices gradually normalize to pre-pandemic levels. However, the presence of new vehicle surpluses indicates that more used vehicles will enter the market in the coming years. Surveys also indicate that buyers are relatively optimistic about the automotive market in the near term. While concerns persist about inflation in the wider economy, consumers are less worried about it in the automotive sector, where prices are gradually declining from their historic mid-pandemic highs.
