New vehicle sales continue to rebound from dreadful lows in late spring and early summer due to the coronavirus pandemic, and part of that comeback means that the value of that car, truck or utility vehicle being traded in is returning to normal too.
So potential buyers who want more than top dollar for their trade better pull the trigger pretty soon, according to a new analysis of data from Edmunds.com.
According to the car shopping experts, the average trade-in value last month dropped 3.3% to $15,874 from $16,411. In short, dealers are feeling less desperate to get new vehicles off their lots and aren’t overpaying for your trade. This also means they’re no longer hunting for good quality used vehicles to stock their previously owned lots either.
“After experiencing a remarkable surge over the past few months, used car values are finally cooling down now that some of the major supply issues faced by the industry are being addressed,” said Jessica Caldwell, Edmunds’ executive director of insights.
“While inventory is still tight in some areas, we’re expecting to see more lease returns make their way to the used market. This steady supply of near-new inventory will help address the increased demand we’ve been seeing in the market during COVID-19.”
The average value for 3-year-old vehicles also fell in October to $20,401, a 1.7% decline compared to $20,747 in September.
The website examined trade-in values for some of the top-selling vehicles in the U.S. – Toyota Camry, Honda CR-V and Ford F-150 – in September and October. All of them saw the value drop with CR-V faring the best with just a 3% slide. The F-150 and Camry saw drops of 5% and 7.6% respectively.
The news gets better — if you’re a dealer.
Edmunds noted that despite dealers offering less money on that F-150 that a potential buyer wants to use as part of their down payment, automakers are still seeing small increases on their average transaction prices, or ATPs.
The ATP for all used vehicle purchases in October climbed to $22,418, a 0.5% increase compared to $22,299 in September. The ATP for 3-year-old used vehicle purchases in October dipped to $24,007, a 0.3% decrease compared to $24,067 in September. In short, dealers are getting more money out of the deal.
The prices have remained flat, according to the website, because there has been an influx of off-lease and off-rental vehicles in the market place. Many rental companies, but Hertz in particular as it goes through bankruptcy, are selling off vehicles that they aren’t using because of the drop in travel during the pandemic.
“We’re finally hitting the tipping point in the used car market,” said Ivan Drury, Edmunds’ senior manager of insights.
“If your household has a second vehicle that you are thinking about selling because it’s going unused during the pandemic, there’s no point in holding onto it in the hopes of its value increasing again. You won’t get a dramatically higher value for your trade-in than you would have just last month, but you should still get a bit more money than usual since values are still inflated.”