Used cars are getting cheaper. Here's a breakdown of how prices have moved from Scions to Jeeps.
- Pre-owned car prices sank 4% in August to the lowest since last September, according to Manheim data.
- Waning demand will make for "an absolute vortex of deflation" at used car lots, one expert tweeted.
Nick Huber has been eyeing a used SUV to trade in for his 2017 minivan. This week, he tweeted that the SUV's price has fallen to $40,000 from $75,000 in just six months.
For Huber and anyone else who's been putting off buying a used car, the market is looking sunnier.
Pre-owned vehicles were among the biggest sources of pandemic-era inflation as semiconductor shortages halted the production of new vehicles and pushing used car prices in line with — or even above — the cost of a brand-new vehicle.
That phenomenon is now going the way of Zoom happy hours, near-empty flights, and wiping down groceries. Used vehicle prices tumbled 4% in August alone, according to the Manheim Used Vehicle Value Index. The print shows prices at the lowest level since September and places the index roughly 11% below its January peak.
The measure tracks a bucket of used vehicles on a mileage, mix, and seasonally adjusted basis, giving a holistic look at the used-car market.
The broad index only captures a birds-eye view of the market. Used-car prices vary dramatically, and as the market cools off, certain models are outperforming while others' values are in freefall.
The winners and losers of the highly irregular used-car market
Used Wagoneer models — Jeep's luxury sub-brand — are tumbling the fastest, with values down roughly 2% in just the last month, according to CarGurus. The models' relative youth likely contributed to the drop, as Wagoneer SUVs have only been in production since 2021. Yet the swift decline signals the flipping culture that dominated the used-car market in 2021 is no longer viable.
Scion, meanwhile, can't blame its plummeting values on its new entry to the market. The Toyota sub-brand was discontinued in 2016, and its used cars are faring about as well in the current market. Used Scions' values slid 1.9% over the past month, second only to Wagoneer and tripling the average decline across the entire market.
Despite the drop in the Scion sub-brand, Toyotas overall are doing a much better job at holding their value. Prices for pre-owned models are only down 0.04% from the month-ago period, handily outperforming the rest of the market.
That strength may not last. Reddit user u/PreMixYZ shared his shopping story in the UsedCars subreddit earlier in September and noted that even used Toyota RAV4s, one of the most popular cars on sale today, are suffering in the weakening market. Three days after being told the price of a used RAV4 was "non-negotiable," PreMixYZ received a call from the dealership offering $1,500 off the seemingly unwavering price.
"I really wanted to say, "So you are saying that your guy was lying to me?" they added.
Cars holding their value best generally fall in two camps: ultra-luxurious sedans and affordable manufacturers. Used Bentley and Rolls-Royce prices are up 0.9% and 0.6%, respectively, likely bolstered by their scarcity and wealthy households' strong investment returns through the pandemic.
And on the other end of the market, pre-owned Hyundais, Hondas, and Mazdas are holding on to their value. Prices for the three manufacturers' used cars are up between 0.3% to 0.9% over the last month, defying the industry-wide slump as Americans seek out affordable and economical vehicles.
Even those dealers are adapting to the shifting market, however.
"When I was shopping for a new car a few months ago, I called EVERY Honda, Mazda, and Subaru dealer in California and found some dealers from each brand with no markup," Reddit user u/EG-111 said in an August 25 comment. "Hang in there, I think things will eventually go back to normal."
The car-market correction has a long way to go
Anecdotes from other car shoppers suggest there are some large discounts to be had in the months ahead.
For those on the brink of shopping for a pre-owned car, patience will be rewarded. Prices could continue to fall 1% to 2% every week, and the end of the year could yield the best deals before a potential rebound, an industry expert and newsletter writer who solely goes by CarDealershipGuy said in a Wednesday tweet.
Used-car lots are on the losing end of the price cuts, and they're already bracing for a steeper decline, Ophir Gottlieb, CEO of Capital Market Laboratories, tweeted Friday.
"Speak to any (very) large used car dealer and you will hear the same," he said. "An absolute vortex of deflation is coming to used car prices."
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