After sitting on the sidelines for the past few years, shoppers are returning to car lots ready to buy. A new report from Edmunds says the used car market is thriving with vehicles “flying off dealer lots at record rates” – and many of those buyers are likely to experience this Sticker shock.
The average age at which new and used vehicles are traded in is increasing, according to the appraisal service. This signals a buyer shift, as people who have held off on buying a car in recent years are finally taking the plunge. A reduction in used car prices is likely to be one of the incentives for the return.
The average used car sold for $27,113 in the first quarter of this year, down 4.5% from the same period last year. However, buyers expecting offers will have to hold onas prices are still nearly 34% higher than the 2019 average of $20,247.
New car prices fell to $46,992 in the first quarter, and average first transaction prices have been below $47,000 for almost two years.
However, the influx of older used cars is an optimistic sign for the industry. In the first quarter of 2022, the average used car trade-in was 7.9 years; in the quarter just completed it was 9.4 years old. This means cheaper vehicles will soon be available to buyers, which could provide a boost to the entire industry.
However, new vehicles are less likely to benefit from this rush. As buyers digest the higher prices, they are becoming increasingly reactive opt for newer used cars instead of new cars and trucks. And Edmunds says that’s unlikely to change anytime soon.
“Most new vehicles are likely to appeal far less to these buyers – they have waited years to purchase and are likely slightly more price sensitive than consumers who were willing to pay above MSRP during the heyday of the shortages,” it says Report. “Until new vehicle incentives make a real comeback, used vehicles will continue to offer what new vehicles cannot: affordable transportation.”