The average used car in America sold for $27,028 in July — down 0.5% from June’s price and 4.1% lower compared to July 2022.
Prices have stopped the wild fluctuations of the past two years because inventories have stabilized.
Inventory Building, But Not Yet Normal
America’s car dealers ended the month with 2.25 million used cars available for sale. That was up from a revised 2.21 million at the end of June but down 9%, or 209,537 units, from the same time a year ago.
Car dealers measure their supply in a metric they call “days of inventory” — how long it would take them to run out of cars at today’s sales rate if they stopped acquiring more.
Supplies remain below historical norms.
“Used-vehicle inventory has seen an improvement since March, but the overall inventory volume is still considered tight,” said Chris Frey, senior manager of Economic and Industry Insights at Cox Automotive. “Days’ supply, at 45, is on par with levels seen in 2019, but there has been a decline over the last several weeks owing to increased used retail sales. Usually, we’d expect days’ supply to increase through year-end, but moderating prices and surprising summer demand may keep inventory numbers down.”
Cox Automotive is the parent company of Kelley Blue Book.
Pandemic Construction Lapse Affecting Totals
Automakers built about 8 million fewer cars during the pandemic. Used car inventories could remain low for years as those cars never find their way to the used market, keeping prices higher than Americans had grown accustomed to.
But there are reasons to expect prices to fall further. The wholesale prices car dealers pay at auction for the used cars they later sell sit 11.6% lower than they did a year ago.
Some Dealerships Better Supplied Than Others
The situation isn’t the same at every dealership or with every type of car.
Honda, Subaru, and Toyota were the non-luxury brands with the lowest inventory of used vehicles in July. Honda had 38 days’ supply, while Subaru and Toyota both had 39 days’ supply. They were the only brands with sub-40 days’ supply. Most other mainstream brands — both luxury and non-luxury — had used-vehicle days’ supply under 60.
Dealers have the most plentiful supply of the most expensive used cars. Used vehicles priced under $10,000 finished the month with a days’ supply of 32, with days’ supply increasing with every higher price segment to the over $35,000 category with the highest days’ supply of 55.