- A new study shows that the price gap between new and used cars has hit a record high,
- New vehicles are now on average $20,000 more expensive than pre-owned alternatives.
- In Q3, the average new car sold for $47,542, while the average used vehicle was $27,177.
We all like the idea of owning a brand new car, one that no-one else has thrashed, scratched, or eaten in. But many of us can’t afford new so buy used instead, and new data shows the price gap between the two is bigger than it has ever been.
An Edmunds study reports that the average new car was $20,365 more expensive than the average used vehicle in Q3 – the first time the gap had crossed the $20k mark. The average new car sold for $47,542 in Q3 compared with $27,177 for a pre-owned one.
Related: Average New Car Costs $48k, But Buyers Only Want To Spend $35k
The gulf between new and used values has grown because new car prices have remained mostly static or climbed slightly, but used car prices in Q3 were down 6.2 percent versus last year. Used prices were, however, still up 31.4 percent from the same quarter in 2019 before the pandemic and chip shortage sent prices crazy.
Incentives for new cars largely disappeared or were dramatically reduced when vehicle supply was choked, but they’ve now returned and Edmunds found the average discount hit $1,744 in Q3 compared with $828 in Q3 2023. But that hasn’t been enough to prevent new cars growing weeds on dealer lots. Edmunds says new cars took on average 57 days to move (or ‘turn’ in dealer lingo), the highest that figure has ever been in over three years. The average used car was snapped up in 36 days.
But while used cars look increasingly better value than new ones, and are cheaper than they were last year, Edmunds says buyers are getting a rude awakening when it comes to financing their purchases. More than 56 percent have in their head the idea of paying $300 per month or less, a figure Edmunds describes as being reminiscent of 2019 figures, though even then the average monthly used car payment was $413. Today it’s $548.
If you’re wondering what a $200-300 monthly budget buys you in 2023, prepare for disappointment. The study reports that today’s frugal shoppers are looking at a used car that’s, on average, three years older and has racked up 16,000 more miles (26,000 km) than what they could have bought with the same budget just four years ago in 2019.
