Mikkel Rosenvold
8 weeks ago

Used vehicle prices could go up - time to sell?

Closeup of a person signing car insurance document or lease paper contract or agreement.
Opat Suvi / Shutterstock.com

As the tax refund season kicks in, car dealerships are seeing increases in used vehicle sales. That could well point towards a tighter supply and increasing prices, explains Dealership Guy website.

"The auto industry has underproduced to the tune of about 10 million vehicles since 2020. That means fewer vehicles to sell → fewer used cars making their way back into the secondary market → (potentially) increased used car prices (again) due to a shortage of used inventory," explains Kinsey Grant.

The underproduction of vehicles should, at least in theory, cause used car prices to rise. We are yet to see that development, however, as the average used-vehicle listing price is down 3% from a year ago.

Much points towards cheaper cars ($30,000 or below) are the most supply-constrained right now. This leads many dealerships to focus on selling slightly more expensive cars through fixed ops offerings and leasing deals.

One of the key reasons for the developments in the used car market is the ongoing tax return season in the US which provides many households with lump sums of tax returns.

Historically, that has been the trigger that led many households to invest in a new car or upgrade their car to a newer or larger model.

Dealership Guy also covers the development in the electric vehicle market, which is very skewed towards the west coast of America. In the Bay Area, EVs accounted for more than 30% of auto registrations. But they represented just 3% of registrations in Detroit. The spread of E.V.'s is progressing, but perhaps not to the space hoped by many.

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