Customers browse in a used car lot on February 15, 2023 in Glendale, California.
Mario Tama | Getty Images News | Getty Images
As recently as 2019, used car shoppers could find a 3-year-old car for about $23,000. Today, that’s unlikely to happen, either from an age or price perspective.
Manufacturing issues during the pandemic have since increased the average age of used cars sold from 4.8 years to 6.1 years. According to a report from car shopping website iSeeCars.comanalyzed more than 21 million used cars sold in 2019 and 2023.
According to the website, the average price of all used car sales has increased 33% so far in 2019, from $20,398 to $27,133.
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“Factory closures and limited new car production during the pandemic are still wreaking havoc on the used car market,” iSeeCars executive analyst Karl Brauer said in a statement.
So far, 58% of used car sales in the second quarter of 2019 have come from used cars that are three years old or newer. That number dropped to 49% in the second quarter of 2023, according to Edmunds data.
Edmunds found that the average used car transaction price in the second quarter of 2023 was $29,472, down 4.6% from last year’s record high of $30,905. Although prices have dropped slightly, used cars overall remain expensive; list prices are 46% higher than in the second quarter of 2018.
“It’s really not a good time for consumers to buy a car, whether it’s new or used,” said Paul Waatti, industry analyst at market research firm AutoPacific.
What impact will the epidemic have on the second-hand car market?
iSeeCars found that new vehicle production dropped sharply due to factory closures in 2020, 2021 and 2022, boosting demand across the used vehicle market. The woes of car rental agencies have exacerbated the problem.
“The used car market has different supply chains, and one of them is leasing agencies,” said Ivan Drury, director of insights at Edmunds.
For consumers, now is really not a good time to buy a car, whether new or used.
Paul Watts
AutoPacific Industry Analyst
Typically, leasing agencies buy about 2 million new vehicles each year and then sell some of their existing inventory. But when people stopped traveling in 2020 due to coronavirus lockdowns, agencies reduced their fleets in the third and fourth quarters of 2020 but did not buy new vehicles, Drury said.
“They don’t have to buy a normal class of vehicle,” Waty said. “They sold off some older models and kept a core number of vehicles to get through the pandemic.”
Leasing agencies now sell vehicles that are approximately 4 to 5 years old, compared to the typical 2-year-old used car that still has a warranty.
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Drury said people always look to used cars when they can’t afford a new car, especially this year when buying a new car is increasingly difficult.
“People are already looking for used cars to save money; that just makes the problem more difficult,” he said.
Waty said newer used cars that are coming to dealerships and need tuning will be waiting a while for these new parts.
“There will definitely be some impact,” he said.
What to consider when buying a used car
Car buyers should keep the following three considerations in mind when purchasing an older used car:
- Carefully inspect vehicles 6 years or older: Look for vehicle history reports; “You’ll see detailed information that lets you understand maintenance and accident history,” Drury says. He added that if the previous owner took the vehicle to a repair shop or mechanic that doesn’t report such data, you want them to have a “binder of information or receipts” to show that you took more than normal care of the vehicle. .
- View warranty: Drewry said the typical warranty is three years. Even if the previous owner says the car still has warranty, double-check with the dealer. “If the vehicle is out of warranty, you can purchase an after-sales warranty,” he added. However, their costs and services vary by region, as some are not available in all states, he said. “Even if you’re looking for something that’s not technically covered by the automaker’s warranty, you can still get around it and buy an aftermarket warranty if you want that assurance,” he said.
- Get pre-approval from a bank or credit union to finance your purchase: Since interest rates are also very high, try to get some form of pre-approval beforehand from your own bank or credit union instead of using dealer financing, which is often more expensive, Vaty said. “Getting pre-approved can save you hundreds (or) thousands of dollars on your loan in the long run.”
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