In recent news, used car values in the United States have continued to decline, dropping by 1.5% on average after a significant 4.2% decrease in October, marking the most substantial monthly drop in over a decade. The average value of a three-year-old car with 60,000 miles on the odometer decreased by $1,130 in October.
Over the past decade, only three instances saw monthly drops in live car values exceeding 3%, occurring in November 2014, May 2019, and November 2020. Following the 1.5% decline in used car values observed this month, Derren Martin, the director of valuations at Cap HPI, emphasized the rapidly changing market, with daily adjustments in vehicle values.
Martin described this as a “market realignment,” with values plummeting by a cumulative 13.6% in the seven months since April. He suggested that November might experience another substantial drop, but values could stabilize, particularly if dealers and car supermarkets decide to stock up for January.
The Auto Trader Retail Price Index reported a 1.7% contraction in average used car retail prices year-on-year for the second consecutive month in October. However, this headline figure masks the resilience of the used car market, with strong consumer demand and price growth in various market segments. Auto Trader’s data also showed that used electric vehicle (EV) supply increased in October, with a year-on-year price decrease of 11.4% for EVs under a year old. Overall, the used EV market showed signs of strengthening.
Furthermore, the used vehicle market is becoming more seasonal, resembling pre-COVID patterns. Aston Barclay’s Q3 used vehicle insights revealed that demand and prices are slowing down while volumes are increasing. Fleet car sales increased by 10% in Q3 compared to the previous quarter. The current hot spot for wholesale buyers is cars priced between $10,000 and $15,000.
Prices of young dealer part exchange cars remained steady in Q3, while fleet car prices fell by 3.7%. Prices for electric vehicles fell by 7.7% in Q3, making ICE and EV models in the $10,000-$15,000 range more attractive to consumers.
In summary, the used car market in the United States is experiencing significant fluctuations in values, with both declines and areas of growth. The used EV market is showing signs of improvement, and the market is returning to a more seasonal pattern after disruptions caused by the COVID-19 pandemic.
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