Used car inventory saw a slight improvement last month, offering a glimmer of hope for buyers in an otherwise challenging market. While used car prices remained flat in April 2024, rising interest rates did push the average monthly payment slightly higher. According to recent data from CarGurus, car buyers are now paying an average of $583 per month, up from $580 in March.
Although these numbers are significantly higher than payment data from 2022, they still fall far below the average payment in April 2023, which was over $600. Despite the relatively steady prices between March and April, the average used car price sits at $28,600, considerably lower than the same month in 2023 and 2022. In April last year, people paid an average of $30,800 for a used car – nearly $2,200 more than this year. The year before that, the average price was nearly $32,000.
Interestingly, even with the downward trend in 2024, used car pricing remains 38 percent higher than pre-pandemic levels. This demonstrates the lasting impact that COVID-19 has had on the automotive industry.
One factor contributing to the stabilization of prices is the increased supply of used car inventory. Dealers now have more options available for buyers, and the time that cars spend sitting on lots has also decreased. In April, used vehicles sat for an average of 73.9 days, marking a 3.9 percent decline from March and a 0.6 percent drop from April 2023. Additionally, dealers had almost five percent more inventory in April 2024 compared to the same month the previous year.
While sales did experience an uptick between March and April, CarGurus predicts that demand will begin to taper off as we move out of the spring buying season. This suggests that the market may stabilize further in the coming months.
While it is encouraging to see that used car prices haven’t increased, there is an interesting trend occurring with electric vehicles (EVs). EVs are at the forefront of price drops in the used car market. The ten vehicles with the largest price declines were all EVs or fuel cell vehicles. The Chevrolet Bolt EUV experienced the steepest drop, declining by almost 38 percent between April 2023 and 2024. The Toyota Mirai FCEV was not far behind. Other notable EVs on the list included the Tesla Model S, Ford F-150 Lightning, Tesla Model X, and Tesla Model Y.
This trend could be attributed to a combination of factors. First, the rapid advancement of EV technology means that newer models offer better performance and longer range. As a result, older EV models may be less desirable and see a decrease in demand, leading to lower prices.
Secondly, government incentives and subsidies for new EV purchases may influence buyers to opt for newer models rather than used ones. This increased demand for new EVs could also contribute to the price drop in used EVs.
In conclusion, while used car prices have remained relatively stable, buyers still face challenges in the market. Rising interest rates have led to slightly higher monthly payments, and despite the improvement in inventory and decreased time spent on lots, demand is expected to wane in the coming months. However, for those interested in purchasing an electric vehicle, this could be an opportune time as used EVs are experiencing significant price drops. As with any major purchase, it is important for buyers to thoroughly research and compare options to find the best deal that fits their needs and budget.
