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Used car prices are always changing, but do they ever actually go down? There aren’t too many cases of this happening, but there have been some scenarios that show used cars depreciating at a minimum.
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When Will Used Car Prices Go Down
That’s the question a lot of people ask when they’re considering buying a new vehicle. The answer is never very satisfying, but here’s what we know: Yes, new-car prices are going up, but so are used-car prices. In fact, the gap between new and used is only getting bigger.
To figure out how and why this is happening, we need to understand where dealers get their cars in the first place. Each year, there are about 15 million vehicles sold to retail customers in the U.S., which represents about five times that number in factory production (some vehicles are sold overseas). The total number of used cars on the road at any given point is roughly 250 million. We refer to this fleet as “used” because it’s not in circulation anymore and thus can’t be considered a part of the economy – it doesn’t count toward GDP or GDP growth or any other measure of economic activity.
Used Car Prices And a Strong Economy
You might be surprised to learn that the used-car market is actually pretty predictable. There are a few factors that can affect used-car prices in the United States, but the economy is by far the biggest.
The typical economic cycle is made up of two parts: expansion and recession. During expansion, unemployment is low and people have money. This leads to higher demand for cars, new and used.
During recession, times are tough. People don’t want to spend as much money on things like luxury items or vehicles that aren’t necessary for daily life. They prefer spending only what they must. The result? Lower demand for cars and higher supply. This means that prices go down across the board in most vehicle segments — which means it’s a good time to buy a used car!
Used Car Prices And The Weather
In general, prices for used cars will go down as the weather warms up. Dealerships like to maintain an inventory of new cars on their lots, and will often have to reduce prices on used cars in order to make room for the new arrivals. Also, since a lot of new vehicles are leased, there can be a significant increase in the supply of two- and three-year old used cars as they come off lease.
Used Car Values Are At An All-Time High
Used car values are at an all-time high, but that hasn’t stopped automakers from trying to reduce the number of cars coming off lease.
Most new car shoppers browse online with a budget in mind. Only a small group of well-qualified buyers can afford to pay full price for a new car. But many of those shoppers could probably afford used cars instead.
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