New vehicle prices have been on the uptick for nearly two years now, and for a while used cars followed suit. However, the worm has turned and prices are sliding down — 10% in the last four months.
Consumers have been hit with a steady stream of price increases for new and used vehicles for some time now, but the trend reversed last fall. This slide is the first year-over-year drop in pricing since the pandemic began, according to iSeeCars.com’s latest analysis of 1.8 million used car sales in December.
“The inflation and high interest rates of the past several months are clearly impacting consumers, and have migrated to the car market where prices are consistently falling,” said Karl Brauer, Executive Analyst at iSeeCars.com.
Brauer noted that Tesla was the hardest hit among used cars. Here are a few other important trends:
- Used car prices fell 2% in November, followed by a 3% drop in December
- The average used car price was down over $1,000 in December, the first substantial drop in more than two years
- Tesla Model 3 was the biggest loser in recent months, sliding nearly 17% since September
- Most electric and hybrid vehicles remain hot, with the Chevrolet Bolt, Nissan Leaf, and Prius Prime prices still up over 20% year-over-year
Regression to “normal”
Used car prices have dropped compared to a year ago for two months in a row, the website noted, marking the first time values have actually decreased year-over-year since June 2020, more than 2.5 years ago.
“We’re still a long way from ‘normal’ but there are clear signs the elevated prices of the past two-plus years are coming to an end,” Brauer said. “It was easy to predict, given the macroeconomic factors we’ve seen over the past six months.
“With everything from inflation to interest rates hitting peak numbers there was no way the upward pressure on car values could continue. The next big question is: how far and how fast will car prices fall?”
Prices every month last year, but didn’t slide below 2021 levels until November. They fell further in December. “Over the next two to three months we should get a sense of how far and how fast prices will drop, but the trend is undeniable at this point,” said Brauer.