[ad_1]
Used car prices have plummeted in the past year, reaching their lowest point since 2021.
The price declines come after a prolonged supply crunch in the new vehicle market caused used values to skyrocket.
Not long ago, the rise in used car prices was one of the key reasons the overall inflation rate was so high. Now, used vehicles are now the No. 1 category driving down inflation in the economy, according to an analysis of consumer price index (CPI) data by car shopping app CoPilot.
The June CPI report showed used vehicle prices are down 10.1% in the past year, after falling 1.5% in the last month.
Why are used car prices falling? CoPilot CEO Pat Ryan explains that the supply of new vehicles is up about 50% since July 2023, which has had a spillover effect on the used market.
“Consumers have finally found themselves with more options to buy new, rather than used, and are capitalizing on it after years of pandemic-driven vehicle shortages,” Ryan said in an email. “As a result, some of the price pressure in the used market has eased.”
According to Cox Automotive, the average list price for a used vehicle is $25,251, a 7% decrease from a year ago. It’s also the lowest average price since the summer of 2021.
Despite the recent declines, used cars are still about 30% more expensive than before the pandemic. Also, high interest rates for car loans are pushing up buyers’ monthly payments. (In the first quarter of 2024, the average used monthly payment was $523, per Experian, compared to $414 in 2021.)
“Affordability remains challenging for consumers, and supply is more constrained at lower price points,” Scott Vanner, a senior analyst at Cox Automotive, wrote in a report.
Finding deals on used cars
To find a good deal on a used car, experts recommend expanding your vehicle search beyond local dealerships with online car search tools.
You can also save money by looking at vehicles in lower demand — dealerships will be more willing to negotiate if a car has been on their lot for a few weeks.
Certain segments of the used vehicle market have seen steeper price declines in the past year. According to CoPilot, average prices for used SUVs, trucks and electric vehicles are down more than the rest of the used market:
- The average price of a 4- to 7-year-old SUV is $31,904, down 21% in a year.
- The average price of a 4- to 7-year-old truck is $32,899, down 17% in a year.
- The average price of a used EV is $37,851, down 14% in a year.
More from Money:
8 Best Car Insurance Companies of 2024
As Used Car Prices Fall, Here’s How to Get the Best Deal
Car Shoppers Can Expect 'More Discounting and Better Prices' in the Second Half of the Year
