In the latest reading of the Consumer Price Index, used cars are one of the few categories with prices that have fallen from a year ago.
By age, 1- to 3-year-old cars come with an average price of $38,987, down 8% from a peak of $42,375 in July. Among those 4- to 7-years-old, the average price is $27,137, a 13% drop from the peak of $31,265 in January. And in the 8- to 13-year-old bracket, the average price of $16,601 is also down 13% from a high of $19,215 in April.
But, despite lowered prices for used vehicles, they remain 33% higher than where they’d be if normal depreciation were occurring, according to Pat Ryan, CEO of CoPilot for CNBC.
“It’s important to remember that prices are still grossly inflated compared to all normal market conditions,” Ryan said. “In the new year, we can expect more substantial and accelerated price drops across the board, as vehicle inventory continues to replenish.”
Demand in the used car market skyrocketed during the pandemic as supply-chain issues made it more difficult for automakers to produce new vehicles. However, the situation is slowly easing up due to modest improvements in inventory on dealer lots as rising interest rates put pressure on the affordability of these vehicles.
Let’s remain hopeful that the used-car market will return closer to normal levels in 2023.
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