Used cars have become slightly cheaper in recent times, but the prices still remain significantly higher compared to 2019. Unfortunately, people now have fewer options than ever before when it comes to finding a car for less than $20,000.
According to a recent analysis conducted by iSeeCars.com, approximately 12% of the used-car market this year consists of vehicles priced under $20,000. This is a drastic decline from the 49% share they held in 2019. These findings reveal that the COVID-19 pandemic has had a severe impact on the availability of affordable used cars.
"The affordable used car has almost become extinct within the used-car marketplace," explains iSeeCars analyst Karl Brauer. He further highlights that in 2019, individuals with a budget of $15,000 could afford over 20% of the late-model used car market. However, at present, this budget only grants them access to a mere 1.6% of the market.
Unfortunately, not only are prices higher, but buyers also have to contend with cars that have accumulated more mileage. "Used-car shoppers are now paying nearly 50% more money for cars that are 20% more used," states Brauer.
Within the under-$20,000 price range, the average mileage of used cars has risen by 46% this year, reaching 63,457 miles compared to 43,541 miles in 2019. Across all price points, more than half of the cars sold in 2023 have at least 20% more mileage than similarly priced cars in 2019, according to iSeeCars.
The surge in used-car prices can be attributed to various factors related to the pandemic. Many individuals have shifted away from public transportation and now require personal vehicles. Furthermore, changes in work situations have caused people to relocate, resulting in longer commutes and increased reliance on cars.
It is clear that the used-car market has experienced significant upheaval due to the pandemic. As prices remain higher and options become scarcer, buyers must navigate a challenging landscape to find an affordable and suitable vehicle for their needs.
The Impact of the Pandemic on the Used-Vehicle Market
The pandemic has had far-reaching consequences, and one of the industries affected is the used-vehicle market. As a result of disruptions in supplies, including chips and auto parts, new-vehicle inventories have decreased, leading to higher prices due to increased demand. This price increase has caused many potential buyers who were priced out of the new car market to turn to the used-vehicle market instead, further driving up demand and prices.
Wholesale used-vehicle prices experienced a 1.6% drop in July compared to June, according to Cox Automotive. Furthermore, their Manheim Used Vehicle Value Index shows an 11.6% decrease from the previous year. While this drop is significant, it should be noted that wholesale prices had been on an upward trend for 22 consecutive months from July 2020 to April 2022, with only six periods of decline during that time. In fact, the index has now returned to the same value as it was in April 2021. Additionally, experts suggest that the downward trend may not continue indefinitely.
Chris Frey, a senior manager of economic and industry insights at Cox Automotive, stated, "Used retail inventory continues to rebuild, but with used retail sales also showing some summer strength, we do not foresee wholesale price declines of serious import through December." This indicates that although there is a gradual increase in used retail inventory, strong sales during the summer season are expected to prevent significant declines in wholesale prices until the end of the year.
According to Cox's estimates, used-car retail sales in July saw only a 0.5% decrease compared to the previous year. Additionally, the average listing price for a used vehicle has decreased by 1.8% over the past four weeks. These figures suggest that despite some fluctuations in prices, the used-vehicle market remains robust.
In conclusion, the pandemic has resulted in supply chain disruptions that have affected both new and used cars. The increased demand for used vehicles has caused a surge in prices, but recent data indicates that wholesale prices may be stabilizing. As the market continues to recover and adjust, it will be interesting to see how the used-vehicle industry evolves in the coming months.
Salesforce emerges as top performer in Dow Jones Industrial Average, but doubts remain about its growth potential. Analysts cautious about revenue growth and im...
Boeing reports a wider loss but exceeds revenue expectations, maintaining outlook for free cash flow. Stock performance declines. Categories: Business, Finance,...