The latest used car price trends for 2024 can help you decide to purchase a vehicle now or wait. In the past 3+ years, the pandemic, low inventories, supply shortages, and rising interest rates increased used car prices to record levels. However, the market appears to be turning around. We’ll look at the latest used car market trends to see if you’re likely to find a better deal this year.

The Latest Pricing Trends

Undersupply was an issue for a while. Now that many dealers are oversupplied, discounts are becoming more common. Experts predict that the price of new and used cars will decline. On average, new cars are already selling for 3.5% less than in 2023.1 

The trends of recent years can help us understand where used car prices are going. While used car values depreciated 3% in 2019, there was a 7% appreciation in used car prices in 2020. From January 2021 to December 2021, the average price of a used car jumped from $22,112 to 29,000.2 That year, wholesale used car prices rose 52% (a far greater rate than retail prices).2

Years of Price Increases Precede 2024

Used car prices spiked dramatically into 2022. Between January 2020 and May 2022, used cars jumped in value from $23,197 to $34,376. This represents a 15.1% year-over-year change. But some types of used vehicles increased more than others. Here’s a look at price trends based on vehicle type during this period:

  • Trucks: An increase from $30,788 to $44,915 represented a 6.9% increase year-over-year.
  • SUV: An increase from $22,773 to $32,280 represented a 16.7% increase.
  • Car: An increase from $17,606 to $27,145 represented a 19.3% increase.
  • Van: An increase from $21,410 to $32,729 represented a 22.2% increase.2

The Latest Used Car Market Analysis

According to Cox Automotive, in December 2023, the average advertised price for a used car was 4% lower than the same time the year before. It had fallen to $25,328. While higher than in 2019, this was lower than at any time in 2022 or 2023, even as there was a general decrease in overall supply.1 

On average, dealerships had a 48-day supply at the end of January (most used car dealers aim for a 60-day target). At the start of February, Toyota and Honda had the lowest used car inventory of non-luxury brands. Among luxury brands, Lexus and Acura had the lowest supply.1

But to predict where pre-owned vehicle pricing will go this year, we’ll look at factors that may contribute to an increase or decrease in prices.

Could Prices Increase in 2024?

Dealers have struggled to keep used cars as affordable as they once did. It’s hard to find a model priced below $15,000. Some of the reasons to support future price increases include:

  • More Expensive Cars Are Being Built: A recent analysis by Kelley Blue Book found 36 new models were priced at $25,000 or less five years ago. Since then, the number of models in that range has fallen by 78%. Cars valued at $60,000 or higher have grown by 163%. With new cars being more expensive, used cars are also going to cost more.1
  • Older, Less Expensive Models Are Harder to Find: Over the past few years, buyers who would have invested in a new car decided to purchase a used vehicle. This brought inventories down. Consumers are also holding onto their cars for longer. The average car on the road is now 12.5 years old. Reduced production following the 2008 recession has limited used car availability as well.1

Are Used Car Prices Set to Decline Further?

Could used car prices decrease more than expected? Let’s look at the possibility of seeing a long-awaited reversal of recent trends:

  • Interest Rate Cuts: One reason used car price trends may move towards affordability is the potential for falling interest rates (the effect may be even greater if inflation eases up). The Federal Reserve is expected to cut interest rates this year, after raising them several times last year. Banks use the rate set by the Fed to calculate rates on loans and other forms of credit; some tick their rates down slightly if they expect a Fed rate cut. 
  • Lower Loan Rates: This has worked favorably on new vehicle loan interest rates, which declined from 10.42% to 10.28% in December. While still high, more rate cuts in the future could benefit new and used car buyers. To begin 2024, lending standards were tighter. Banks were turning down more borrowers. That could change later this year.
  • Observed Price Decreases: The Manheim Used Vehicle Value Index declined by 7% compared to last year. A larger drop than anticipated, this reflects a 21% decrease in the index over two years. As new vehicle sales increase, more trade-ins will be available for resale. This may result in more favorable price trends for used car buyers looking for a bargain.

Decline of Used Car Prices vs. New Car Prices

In recent years, purchasing a used car has become less of a bargain. However, in January 2024, used car prices fell further than new car prices. That’s good if you’re in the market for a used car, but not so much if you’re trading in one. The ongoing shortage of used cars is expected to last for years. However, shopping around can get more for your trade-in; one dealer may have a greater need for your type of vehicle than another.

Is It a Buyer’s Market or Seller’s Market for Used Cars?

Falling prices, increased inventory, and more discounts are creating a buyer’s market. Many signs point to further price decreases. You can find a good deal now but may benefit by waiting just a little longer.

Are Certain Car Brands or Types Holding Their Value Better Than Others?

As of 2024, vehicles that are retaining the most resale value include the Ford Bronco, Toyota Tacoma, Mercedes-Benz G-Class, Toyota Tundra, Chevrolet Corvette, Toyota GR Supra, Toyota Prius, and Toyota 4Runner.3

Find an Affordable Used Car at Hawthorne Auto Square

If you’re looking for a used car at an affordable price, and have been following used car price trends, check out our extensive inventory of low-mileage, high-quality vehicles. We can help you find a model that meets your needs and budget. Our streamlined in-house financing process means affordable payment plans are available, regardless of your income or credit. Plus, we also offer a six-month warranty and provide top-notch maintenance and car service. For more information, visit us at 11646 Prairie Avenue in Hawthorne, CA, or call (855) 236-4781.

Sources:

  1. https://www.kbb.com/car-advice/is-now-the-time-to-buy-sell-or-trade-in-a-used-car/
  2. https://caredge.com/guides/used-car-price-trends-for-2024#How_much_did_used_car_prices_increase_in_2021
  3. https://www.kbb.com/awards/best-resale-value-cars-trucks-suvs/