Santa Monica, Calif., Aug. 28, 2023 (GLOBE NEWSWIRE) -- Years of postponed vehicle purchases are propping up the used market despite ongoing unfavorable conditions for car shoppers. According to the latest Used Vehicle Report released by the car shopping experts at Edmunds, the average days to turn[1] for used vehicles dropped to 34 days in Q2 2023 compared to 39 days in Q2 2019[2], which analysts say is a strong indicator that vehicle acquisition is a high priority for consumers regardless of those unfavorable conditions.
“Used vehicle demand continued to defy the odds in Q2,” said Ivan Drury, Edmunds’ director of insights. “Shoppers are facing interest rates not seen since the Great Recession and inventory challenges have kept prices historically high, but used purchases are continuing to chug along. A large number of consumers are likely being forced back into the market out of sheer necessity despite their efforts to sit things out over the last few years.”
In the Edmunds Q2 2023 Used Vehicle Report, Edmunds analysts dug deeper into the major trends currently shaping the used car market. Findings include:
- Used vehicle prices have dipped from record levels but remain historically high. The average transaction price for used vehicles in Q2 2023 dipped 4.6% to $29,472 compared to last year’s Q2 peak of $30,905, but still constituted a significant 46% increase from Q2 2018’s $20,153.
- Used cars are getting older. In Q2 2019, dealers were stocking newer used vehicles, with 58% of their sales from 3-year-old or newer used vehicles; in Q2 2023, that figure decreased to 49%. Edmunds analysts attribute this trend to disruptions in rental car agency replacement purchases and leasing cycles in recent years.
- Higher-mileage vehicles aren’t offering as much financial relief as they used to. Edmunds data reveals that used vehicles with 100K-150K miles cost 40% more in Q2 2023 compared to Q2 2019, while vehicles with 150K-200K miles are commanding 28% more than in Q2 2019.
- Off-lease is no longer a reliable pipeline for near-new vehicles in today’s market. According to Edmunds data, nearly 1 in 5 new vehicles are leased in today’s market, compared to 1 in 3 just a few years ago. Analysts predict that the off-lease pipeline is likely going to be further restricted moving forward because many captive finance companies have implemented rules against working with third-party companies for buyouts and early lease terminations.
- Leasing goes green, but used market benefits are still many years away. Although EV leasing has seen an uptick in 2023, analysts say volumes are so small that the industry can’t expect a significant number of EVs to hit the used market for many years. Additionally, since EV starting prices are so high to begin with, it’s unlikely that in the next few years off-lease EVs will drop in value enough to fall below the $25,000 cap to qualify for the Inflation Reduction Act’s used EV tax credit.
Strategies for shoppers reentering the used market
To help consumers navigate the challenging dynamics of the used vehicle market, Edmunds experts share these car shopping tips:
- Get a value for your trade-in. Used cars are in high demand and, if you are currently a car owner, leveraging the equity in your trade-in could be one of the most effective ways to offset the cost of your next purchase. Before you begin shopping for a vehicle, get a free appraisal for your vehicle on sites like Edmunds so you can factor your trade-in value into your budget. You can also track the changing value of your trade-in with this tool on Edmunds.
- It might be time to rethink purchasing 1-year-old vehicles. If you were considering buying a new vehicle for the purposes of reselling at a profit, you might want to reconsider it, now that new vehicle inventory is improving: The average transaction price for 1-year-old vehicles was down more than $2,000 in Q2 2023 compared to Q2 2022. Conversely, those who were searching for 1-year-old vehicles last year and gave up due to asking prices that mirrored the original MSRP (or were above it) might be better positioned to take advantage of pricing relief on these vehicles.
- Consider purchasing sooner versus later. If you know that you’ll need a reliable source of transportation in the next one to three months, prices won’t fall enough to make it worth the cost of maintenance if your existing vehicle requires significant repairs. If you have four to six months or even a year, it might be best to hold off and save for repairs and a down payment until 2024.
“Flexibility is key for car shoppers navigating the used market,” said Joseph Yoon, Edmunds’ consumer insights analyst. “The market has changed dramatically in the last few years and therefore your old shopping habits may no longer serve you like they used to. Being open to doing something different than before, such as reconsidering your selection of cars or even rethinking your budget priorities, might land you the deal you are searching for.”
Read Edmunds’ Q2 2023 Used Vehicle Report here. Consumers can start shopping for local used inventory on Edmunds here.
About Edmunds
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune, Great Place to Work and Built In, Edmunds is based in Santa Monica, California. Follow us on TikTok, Twitter, Facebook and Instagram.
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[1] How many days a vehicle sits on a dealership lot before being sold
[2] Q2 2019 figures are included for prepandemic comparisons
Talia James-Armand Edmunds 310-491-8738 pr@edmunds.com
