5 Used Car Market Trends US – 2023 Update
Are you in the market for a used car, or looking to sell your car in the near future?
Having your finger on the pulse of the latest used car market trends can help you know what to expect when buying a used vehicle, as well as give you a better idea of selling your car in the current market.
With the year just getting started, we decided to round up five of the latest used car market trends to be aware of in the coming year. Let’s get started!
Top 5 Used Car Market Trends US
1. Used car prices will increase.
If you’re looking at buying a used car at some point this year, the bad news is that the market is not great, but things may look a bit better if you’re hoping to sell or trade-in. Used car prices are set to increase over the coming year, and have increased by almost 40% since 2020. This is due in part to the shortage of microchips that are essential in the manufacturing of new vehicles, which has caused an inventory shortage, pushing up demand and thus increasing prices overall for quality used cars around the country.
2. Used car prices may decline toward the beginning of 2023.
If you’re in the market for a used car, it’s not all bad news. The current boom of used and new vehicle prices is predicted to wane. Some analysts predict a fall of 20%–30%, pushing prices down almost to pre-pandemic levels. While this is great for a buyer’s market, those who paid prices of up to 40% above the normal rates in 2020 and 2021 will have a difficult, if not impossible time making their money back.
That said, others have speculated that there’s no reason for sellers to panic. They predict pre-pandemic levels of supply will level out by 2025.
3. SUVs and pickups have the fastest growing demand in the used market.
While sedans are steadily decreasing in popularity and production, SUVs are taking the new and used market by storm. In 2020 and 2021, the global market for utility vehicles grew by over 10% and accounted for almost 45% of all car sales globally. This will certainly set new records and comes only a few years after SUVs became equal in sales to sedans, with the scales now very quickly tipping.
4. Average used car prices are still climbing.
While there is some relief expected, used car prices are still climbing. The average asking price for a used car in the US was at roughly $21,000 pre-pandemic and rose to a shocking $27,000 in the space of just 5 months. Unable to find new cars due to COVID restrictions, shoppers turned to the used market, swiftly pushing up prices dramatically.
5. The used car market is expected to be worth $2150.5 billion by 2030.
Even though there is a dip predicted toward the end of this year, the used car market is expected to grow to be worth around $2150.5 billion by 2030, at a rate of a staggering 6% CAGR (compound annual growth rate). The used car market was valued at $1,411.5 billion in 2020, with prominent growth over the last year and increases expected over the coming decade.
Why has the used car market grown so rapidly?
Due to the shortage of new cars caused by the chip shortage, created by the pandemic, many consumers turned their eyes toward used vehicles in 2020 and 2021. This has caused a surge in prices not only for new cars but used vehicles too, turning used vehicles into appreciating assets — a previously unheard-of phenomenon.
When will used car prices begin to normalize?
With the COVID pandemic still well underway, this is anyone’s guess. However, barring an outbreak of a new and deadly COVID variant resulting in more work and travel restrictions, most experts agree that prices will begin to normalize from the beginning of 2023 until 2025. This is due to more new cars being available on the market, thus reducing the demand for used vehicles.
Is it a good time to buy or sell a used vehicle?
With prices at an all-time high for used cars, now is certainly not a good time to be buying a used car. At the moment, it’s still very much a seller’s market and won’t be likely to change in the next year. The used car market prices have increased by 13% since 2021 and a staggering 41% since 2019, so unless you are really in need of a vehicle, it’s not a buyer’s market at the moment.
The used car market has exploded over the last couple of years, almost solely due to the shortage of new cars caused by the COVID pandemic. Used cars have now become an appreciating asset, a previously unheard-of phenomenon. That said, with the world slowly beginning to normalize, the used car market is set to do the same in the next year or two.
Featured Image Credit: iniesta44, Pixabay