Cars and Drivers

Used Car Prices Collapse

Douglas A. McIntyre

Published: July 12, 2024 6:59 am

The June CPI results showed that inflation increased only 3% year over year, a relief for those concerned about the sharply rising prices from two years ago. Many analysts said the news opened the door for a September rate decrease by the Fed. Until recently, that appeared off the table, with the first Fed cut more likely in November after the election. While some components moved up or down compared to the overall index, none moved as much as used car prices, which fell by 10.1%. The news is a relief for potential car buyers who have seen prices surge since early in the pandemic.

Both new and used car prices have jumped since 2021 because of supply chain problems. New car prices averaged just over $37,000 in 2021 and rose to $47,000 early this year. This high price moved many people out of the new car market and into the used one, raising used car prices as well. These are America’s best used cars.

Used car prices have dropped for several reasons. One is that new car prices have either stabilized or fallen. The other is that last year, the average age of a car on the road in America was 12.6 years, an all-time high. People keep older vehicles because they want to dodge the cost of a new or slightly used car. Additionally, cars are better built than in decades past. More and more people own cars that have been driven over 100,000 miles.

As new car sales continue to rise and their prices fall, the upward price pressure on used cars will continue to disappear.