What is happening in the used car market? Why are the prices going down at the auction but dealers refusing to lower the prices at dealerships? Here is our Cars For Sale Near Me market update for December 2022.
The used car market has been changing dramatically throughout 2022.
Vehicle values drop across the board at auction by over 27% this year, we lost 12% just in November alone. Yet, there is going to be no market crash without a catalyst. There will be a restriction on buying, the market slow down, and cars will slowly go back to what they were originally worth.
Why used car prices are falling?
It’s all about supply and demand. One of the key aspects is Interest Rates. If you are a well-qualified buyer with great credit, you are going to get a payment of 6.25%, and in another month or so 6.5-7%. Why is it so much important? Imagine you bought a car in 2018 having a 350 USD payment. It is one thing. But if you crash it and try to buy the exact same car with overinflated interest, that car would be 6-7 hundred USD a month, two times more than what you are currently paying.
Days on market/Days on the lot
If you go to Car Gurus, Rolls Auto Sales, Auto Trader, and other websites, many of them will show you the actual car for sale and how long it has been on there when you request the info. There may be cars for up to a year waiting for the buyer. During the Pandemic, the average days of cars for sale near me on the market were 5-7 due to the high demand. Today, our average market is 57-60 days. It means that we have more Supply but the Demand is fading faster and faster. So why aren’t the prices going down? For two reasons:
- Advertised price is what’s called Lazy Man’s price. They are going to put the price up to 60 thousand USD and not give you the best price unless you are sitting in front of them and negotiating. With every day the car stays on the lot you get more bargaining power. Use it for your own benefit.
- Dealers cannot afford to lower the price. Many of them paid way over the book at the end of 2020 and the beginning of 2021. Since 2020, we saw car value drop by 27%, which means a hundred thousand USD car, for example, has lost 27 thousand USD of their value. Understandable, right?
We hope, we were useful. Take care and good luck!