Your car probably isn't worth as much as you think. Here's how to know what it's really worth.
- During the peak of car inventory problems, drivers could have traded in used cars for thousands.
- That might not be the case anymore, experts say.
If you've been wanting to trade in your old car but waited to do it, you won't get as much for it as you could've during the peak of the pandemic.
Trade-in values hit a high of $25,556 in June 2022, according to Edmunds. Meanwhile, the average transaction price for a used vehicle peaked at $31,300 in April 2022, J.D. Power said.
"All consumers have been hearing for the last couple years is, the value of their used cars are so high, you can get a lot of money for used cars," George Chamoun, CEO of ACV, a digital auto marketplace, told Insider. But, "These used car values have been dropping over the last year. As the consumer goes into the dealership, it's not going to be as high as it was last year at this time.
"Many of these vehicles have dropped anywhere from 15 to 30% less year over year."
It's true: In January, trade-in values stood at $21,984 (down 14% from the peak), per Edmunds.
Meanwhile, the average used vehicle transaction price was $29,226 in February (down 6.6% from the high), per J.D. Power.
What owners and buyers need to keep in mind
A lot of dynamics make today's auto retail market different from several months ago, especially during the height of COVID-induced vehicle supply-and-demand problems.
New and used vehicle prices were high amid low inventory. For sellers (much like what happened with the housing market), it was a great opportunity to make some money on used cars. Whether a vehicle owner just wanted to take advantage of the chance to trade back something relatively new, or they had a clunker sitting there, dealers bought up all sorts of used vehicles just to have something on their lots to sell.
Now, some automakers' inventory is steadily recovering as the chip shortage becomes less severe. Concerns about high interest rates and the broader economic environment have some buyers holding off on a purchase. The used-vehicle market remains somewhat volatile, but new vehicle prices are easing, and automakers are having to bring back incentives like loyalty cash and rebates on higher-end vehicles.
Car buying won't ever revert to normal, but that's all to say, it's no longer the best environment to get thousands of dollars for your used car that's probably worth a lot less (no offense).
Consumers might still be able to get money for certain used cars
Still, not all hope is lost. Pricing is still a good indicator to watch, said David Paris, J.D. Power senior manager of market insights.
"While we've seen some cooling since their peak, used prices remain extremely elevated still," Paris said.
Consumers can fare better trading certain types of cars over others right now.
"The low mileage, newer stuff isn't going as fast because you can get something brand new for a really good price or maybe even cheaper," Whitney Yates-Woods, dealer principal of Yates Buick GMC in Goodyear, Arizona, said of used vehicle inventory. "We're trying to stay away from that just-slightly used vehicle.
"For people that can't get those incentivized rates and they need a good deal," Yates-Woods added, "we're trying to actually buy higher mileage stuff, which we normally have never done in the past, but there is a big market for that."
Makes and models also play a role in what will trade higher. For example, used Hondas are still high because the company's new inventory hasn't recovered to the same degree as other automakers.
"Each and every car is different and the condition of every car is different," Chamoun added. "If the vehicle is in incredible condition, they're going to see a higher value. If the vehicle is in a lower condition, they're going to get a lower value.
"At the end of the day," Chamoun said, "it's car by car."
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