Falling used car values are good news for consumers

Did you know that if the current rate of used car sales continues, 2024 could be the best year for the second hand car market since the pandemic? The 2024 used car market could be the strongest since the pandemic, according to Car Dealer Magazine, but there are forces of change ahead.

Return to normal for used car sales

After the pandemic, disruptions, the used car market is gradually returning to normality. Transaction rates are positive, and demand is tracking up by approximately 7%. Supply has also increased by 3%, says Car Dealer Magazine.

However, the picture varies depending on the type of stock. Three to five-year-old cars are in short supply due to reduced sales during Covid. On the other hand, the market has seen a significant surge in used electric vehicles (EVs), with approximately 15 times more EVs available than in 2019.

Why are used car values falling?

Used car values have been on a rollercoaster ride lately. Over the last six months, used car values have started to fall noticeably after being unusually high for almost four years, especially since the onset of the COVID-19 pandemic

Used car values have been falling due to:

  • Supply and demand dynamics: these play a crucial role in terms of new car sales, which affect the used car market. Private buyers face challenges too due to economic fluctuations.
  • Pandemic Years (2020-2022): Fleet sales suffered during lockdowns and manufacturers couldn’t build cars, and dealers couldn’t sell them. Consumers are also about 25% below pre-pandemic sales levels.

Consumers confident with positivity around affordability

This situation varies depending on the type of stock car dealers focus on, however, surveying 25,000 used car buyers annually, Auto Trader found a lot of positivity around affordability, says Car Dealer Magazine. Consumers are feeling confident, which bodes well for the market.

There has been a significant disconnect between the retail market and the wholesale market. Auto Trader encourages dealers not to follow what’s happening at auctions but instead to price their cars based on what they can sell them for in the retail market. The large trade value drops observed in the final quarter of 2023 have impacted retail prices, and this challenge continues to be a topic of conversation.

Used EV bargains

While heavy depreciation is a concern for new car buyers, it’s a boom for used car buyers. EVs that were once expensive in showrooms are now available at a fraction of their original price, according to the Telegraph.

In terms of the stock dynamics, EVs  are becoming increasingly accessible to buyers, which is great news. The number of used EVs on the market has skyrocketed and it could continue to do so if it keeps carrying on the way it’s going.

While the used car market faces forces of change, the positive trends suggest that 2024 could indeed be a strong year for second-hand car sales.

Overall, if you’re in the market for a used car, now might be a great time to explore the options. Falling prices mean more affordability for consumers! 2024 promises a smoother ride for used car enthusiasts. Buckle up and be sure to keep an eye on those EVs, we’re in for a memorable year with the second-hand car market!

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