Key Points
- The price gap between near-new and brand-new vehicles widens, with used vehicles 3 years old or newer now $13,686 cheaper on average than new cars.
- Used EV market sees a significant 29.5% drop in resale values, influenced by oversupply and decreased demand for new EVs.
- Despite a 5.5% year-over-year decrease, used vehicle prices remain high at an average of $28,935, marking a 44% increase from Q3 2018.
The used vehicle market is experiencing a significant transformation, as detailed in the latest Q3 2023 Edmunds Used Vehicle Report. After years of volatility and uncertainty, the market is showing signs of stabilization, heralding a return to familiar territory for those interested in used cars.
New vs. Near-New Vehicle Price Gap
A key development in the used car market is the widening price gap between near-new and brand-new vehicles. The average price for vehicles 3 years old or newer is now $13,686 below the new-car industry average, a substantial increase compared to the $8,950 difference in Q1 2022. This trend is driven by increased prices for the latest model years and the oversupply of new-car inventory, leading to significant incentives and price reductions on new vehicles.
Aging of the Used Car Fleet
The current market features older used vehicles with more miles, yet these cars sell quickly. For a similar age and mileage vehicle, a shopper in 2019 would now need to increase their budget by nearly $10,000. The urgency in the market is further underscored by the decreased days-to-turn rate at every price point, indicating a faster turnover rate in the used car market.
Changes in the Used EV Market
The used electric vehicle (EV) market is particularly impacted, with a notable 29.5% drop in the resale values of used EVs, compared to only a 4.8% decline in overall used vehicle values year-over-year. This significant decrease is attributed to slowing demand for new EVs and oversupply, leading to substantial price cuts and low resale values of used EVs, which could deter new EV purchases and broader EV adoption.
Overall Trends in Used Vehicle Prices
The average transaction price for used vehicles in Q3 2023 was $28,935, down 5.5% from the previous year’s value of $30,603, yet still representing a significant 44% increase from Q3 2018’s figure of $20,085. The quarter-to-quarter price drop was also more pronounced than usual, with a 1.8% decrease from Q2 to Q3 2023, compared to the typical 0.7% decrease observed from 2015-2019.
The Road Ahead
The used vehicle market is moving towards a new normal, characterized by higher price levels than pre-pandemic but with increased predictability and stability. The average days-to-turn during Q3 2023 was 35 days, five days quicker than pre-COVID-19 levels, despite prices being up 47.9% compared to the average from 2015-2019. This suggests a high demand for used vehicles and a market that is gradually adjusting to new realities.
Conclusion
As we navigate through the changing currents of the used car market, the insights from Edmunds’ Q3 2023 report paint a picture of adaptation and evolution. While prices remain higher than pre-pandemic levels, the gap between new and near-new vehicles, the rapid turnover of older vehicles, and the significant shifts in the used EV market signal a dynamic environment. These trends not only reflect the current economic landscape but also offer a glimpse into the future of automotive buying and selling. For consumers and dealers alike, understanding these shifts is key to making informed decisions. As the market continues to evolve, staying attuned to these trends will be crucial for navigating the road ahead in the used vehicle market. Keep following our blog for the latest updates and analyses in the automotive world.
