ATLANTA, GA – A number of factors – including a reduction in leasing and drivers holding on to their cars longer – will prevent used car availability from returning to 2019 levels until 2028, experts at Cox Automotive say, but even as inventory levels gradually improve, the current high prices found in the market are expected to never return to pre-pandemic levels.
Even though it is essentially in the rearview mirror by now, the COVID-19 pandemic kicked off a degree of volatility in the used car industry that it has yet to recover from, with global supply chain issues driving up the prices of pre-owned vehicles to degrees never seen before.
Currently, the average listing price for a used car is approximately $27,266, which is a reduction from the $28,050 price tag that used automobile shoppers found themselves confronted with one year prior, but nonetheless represents a whopping 38 percent increase from the pre-COVID average of less than $20,000.
Experts say they anticipate that the supply of used cars will begin to recover at some point in 2025, but they will not reach the plentiful levels that they were at in 2019 until at least 2028. But even as the inventory of pre-owned cars finally normalizes in the coming years, prices are not expected to correspondingly decrease at the same level, according to Cox chief economist Jonathan Smoke.
The math suggests historically that the average used car price next year will be higher than it is today,” he said. “When are we going back to 2019 prices? That’s a softball question. The answer is never.”
There are three key factors that experts say are responsible for this recent development in the pre-owned vehicle market.
First, fewer people have been leasing vehicles in recent years. Prior to the pandemic, leases made-up approximately 30 percent of the automotive market, but today that number has creeped down to just 17 percent. This, in turn, has had a serious impact on the number of off-lease vehicles entering used car lots.
Second, more and more drivers are holding on to their cars for longer these days, additionally depleting the pre-owned market’s inventory even further.
And finally, vehicles that offer high profit margins that automakers have placed a priority on building and selling in recent years subsequently take much longer to become affordable in the used car market.
All this has led to an industry where only 30 percent of used vehicles sold for less than $20,000 in the first quarter of 2023; previously, in 2018, that price range made-up a whopping 60 percent of pre-owned sales.
Joe Mcdermott is a journalist, reporter and writer for SEARCHEN NETWORKS® as well as other independent news and media organizations in the United States. Joe works on a wide variety of topics and fields, has been featured in print and online in a variety of publications, from local to national, and helps keep a keen-eye on what’s happening in the automotive world for Auto Buyers Market.