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Could The Used Car Market Finally Be Cooling Off?
Could The Used Car Market Finally Be Cooling Off?-November 2024
2024-02-19 EST 22:09:29

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The used car market has been absolutely wild lately, with the prices of some used cars exceeding the cost of their brand new counterparts. Now, though, some experts are positing that we may be seeing prices level out.

Used car prices soared over 30 percent between March and June of this year, where previously the largest three-month jump in used car prices took place in 1974, when used cars skyrocketed a mere 12 percent.

That being said, July signaled a change: prices only raised 0.2 percent, which seems to bode well for the used car market. While even leveling out used prices would still result in seriously expensive cars, the hope is that there will start to be a significant downswing to equal out this year’s jump.

Further, that wholesale prices are decreasing. Basically, that means that dealerships are acquiring cars for less money than they were previously. There’s usually a delay of several weeks before those cars actually hit the dealership lot, so we may not see an immediate change in the near future — but it could very well be coming.

Of course, there are no guarantees that lower wholesale prices and a steadied market mean prices will drop. In fact, it could create a greater profit margin for dealerships or private sellers, since they know people have previously been willing to spend out the nose to get something used.

Here’s a little more to that effect from the CNN article:

The gap between new and used car prices narrowed during the recent run-up in used car prices, so the used car prices are likely reaching near their natural ceiling, said Jessica Caldwell, executive director of insights with Edmunds. At some point people who are car shopping will decide to buy new rather than used, even if they have to wait for the new car they want, she said.

“It comes to the point where it just doesn’t make sense to buy used,” she said. “We don’t expect the prices to correct and go back to 2019 levels, but we expect them to become more normal and cool off in the second half of the year.”

Again, that makes sense — but whether or not dealerships and private sellers drop prices significantly or if they just keep tabs on the pulse of the market and keep their sale prices slightly lower remains to be seen.

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