Used Car Prices Continue to Drop

Overview

If you’ve been in the market for a used vehicle, you may have noticed that prices are starting to decrease. According to recent data, used car prices dropped by 0.6% last month, with wholesale prices down by 12.1% from a year ago. This trend has affected electric vehicles and compact cars the most, as their values have significantly decreased.

Market Trends

The Manheim Used Vehicle Value Index reported a 0.6% decrease in May, reflecting a 12.1% drop from the previous year. Despite the Memorial Day holiday potentially impacting these numbers, Cox Automotive stated that depreciation trends are currently higher than long-term averages.

Vehicle Categories

Compact cars saw the most significant decline at 17.4%, followed by mid-size cars at 16.3% and crossovers/SUVs at 16%. On the other hand, pickups and luxury vehicles managed to hold their value better. Electric vehicles experienced a 16% decrease in value compared to an 11.6% drop for other types of vehicles.

Retail vs. Wholesale Prices

It’s essential to understand the difference between retail and wholesale prices when buying a used car. Retail prices are higher and represent what you would pay at a dealership, while wholesale prices are lower and reflect a car’s trade-in value.

Outlook

Cox Automotive estimates that retail used-vehicle sales have increased by 6% compared to last month and 12% compared to the previous year. Despite some softening in the market towards the end of May, the average retail listing price for a used vehicle has remained stable.

Conclusion

While used car prices have been on the decline recently, it’s essential to stay informed about market trends and fluctuations. Understanding the factors that influence pricing can help you make informed decisions when buying or selling a used vehicle.