The average used car buyer paid $27,147 in June — $109 less than in May. After several nail-biting years of rapid price changes, let’s just call that flat. The used car market has shed most of the volatility seen during the COVID-19 pandemic and the subsequent microchip shortage.
“The last several months have followed very closely to 2019’s levels, the last normal year we’ve seen,” said Chris Frey, senior manager of Economic and Industry Insights at Cox Automotive.
Cox Automotive is the parent company of Kelley Blue Book.
Prices Stable Because Supply Is Stable
Prices have stabilized largely because inventory has stabilized. 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. The average dealership had a 47-day supply at the end of June. That’s essentially unchanged from May’s supply of 46 days.
Stable Doesn’t Mean Good
That figure is still historically low. 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 prices may decline from current levels. Dealers paid about 10% less at auction for used cars this June than previous. Price drops in the wholesale market usually take six to eight weeks to appear in the retail market. Weak economic conditions seem to have slowed that process this summer.
Dealers, Frey says, are “balancing their inventory to the sales rate, keeping days’ supply steady, even as total supply continues to improve.”
Cheapest Cars Hardest To Find
Dealers have a thinner supply of inexpensive, older used cars. The days’ supply for under $10,000 vehicles was 31, increasing with every higher price segment to the over $35,000 category with the highest days’ supply of 52.
Among the non-luxury used vehicles with the lowest inventory were Dodge and Honda, with 38- and 39-day supplies, respectively. They were the only brands with sub-40 days’ supply. Most other mainstream brands — both luxury and non-luxury — had days’ supply under 51.
