Used Car Market Situation in the USA: Prices Are Rising, But There Is Hope
Average prices for used cars in the United States have reached their highest level since 2023, making it significantly more difficult for buyers to purchase them. This makes cars even less affordable than before.
Market Analysis Details
Analysis of data from vAuto Live Market View, conducted by Cox Automotive, shows that as of the end of June, used car inventories on dealer lots in the US stood at 2.14 million units, equivalent to 47 days of supply. Inventories increased by 1% compared to May and by 0.2% compared to last year, although they remain limited by historical standards. The average price currently stands at $27,027, which is 6% higher than a year ago and the highest figure since the summer of 2023. This figure is only 0.4% higher than the revised May average of $26,928.
Back in February of this year, the average price for used cars was $25,207, after which it rose sharply in April and May. This increase followed a strengthening of wholesale prices at Manheim auctions earlier in the year, as well as a higher share of newer cars in the sales mix.
Average Used Car Price
Cox Automotive estimates that 1.376 million used cars were sold in June, down from 1.449 million in the previous month and significantly lower than the 1.634 million sold in March, when average prices hovered around $25,369.
Affordability Issues
Not only is buying a used car becoming more expensive, but finding an affordable option is also becoming increasingly difficult. The supply of used cars priced below $15,000 in June represented only 33 days of supply, indicating a shortage of vehicles in this price range. This is significantly lower than the average market figure of 47 days.
Is There Any Good News?
Although total used car sales in June fell by 1.6% compared to last year and by 1.9% compared to May, this decline is not unexpected. Cox Automotive notes that the slowdown from May to June “aligns with the seasonal patterns typically observed at the start of summer.” Inventory volume increased by 1%, while sales pace dropped by 2%, leading to a 2.9% increase in days of supply. The resulting 47-day supply was one day higher than a year ago and two days higher than the revised May figure of 45 days.
Used Car Days of Supply
While all this may sound like bad news, there is a silver lining. Access to credit has reached its highest level since December 2015, so buyers have more financing options than before. Ford, Chevrolet, Toyota, Honda, and Nissan together accounted for nearly half of all retail used car sales in June.
Certified Pre-Owned Car Sales
Sales of Certified Pre-Owned (CPO) cars showed a mixed picture. Volumes in June rose by 5% compared to the same month last year but fell by 7.8% compared to May, reaching approximately 210,335 cars, down from 228,148 in the previous month. This reduced the CPO share of total retail used car sales from 15.7% in May to 15.3% in June, and year-to-date, this segment is roughly 2.1% lower than in the same period last year.
Retail Used Car Sales
Overall, the used car market in the US is in a phase of rising prices, creating challenges for buyers. However, improved access to credit may partially offset this trend, allowing more people to purchase a car despite higher prices. It is worth noting that the shortage of cheaper models may force buyers to look at more expensive options or consider alternative financing methods. This could also stimulate demand for new cars if the price difference becomes less significant.