Photo Credit: Zerbor
I have told you on the Car Pro Show
that I saw used car prices falling at the auction recently. Edmunds data agrees with this and odds are great the fall will continue through the rest of the year, although at a modest pace. This info should play into your decision of doing something now instead of waiting until the end of December, especially if you are coming out of a lease.
Edmunds research shows used vehicle trade-in values are returning to normal levels after skyrocketing during the summer months. The average value for all vehicles traded in during the month of October dropped to $15,874, a 3.3% decrease compared to $16,411 in September. The average value for 3-year-old vehicles also dipped in October to $20,401, a 1.7% decline compared to $20,747 in September.
"After experiencing a remarkable surge over the past few months, used car values are finally cooling down now that some of the major supply issues faced by the industry are being addressed," said Jessica Caldwell, Edmunds' executive director of insights. "While inventory is still tight in some areas, we're expecting to see more lease returns make their way to the used market. This steady supply of near-new inventory will help address the increased demand we've been seeing in the market during COVID-19."
Trade-in values are also dropping. Edmunds experts also took a look at trade-in values for some of the most popular cars, SUVs and trucks sold in the U.S. ó the Toyota Camry, Honda CR-V and Ford F-150 ó and found that they all notably decreased across the board in October compared to September. The average trade-in value for all used Toyota Camrys dropped to $12,508, a 7.6% decrease compared to $13,539 the previous month. The average trade-in value for all used Honda CR-Vs fell to $15,461, a 3% month-over-month decrease from $15,943. And the average trade-in value for all used Ford F-150s dropped to $23,677, a 5% decrease compared to $24,911 in September.
"We're finally hitting the tipping point in the used car market," said Ivan Drury, Edmunds' senior manager of insights. "If your household has a second vehicle that you are thinking about selling because it's going unused during the pandemic, there's no point in holding onto it in the hopes of its value increasing again. You won't get a dramatically higher value for your trade-in than you would have just last month, but you should still get a bit more money than usual since values are still inflated."
Although used car values have decreased, Edmunds data reveals that the average transaction price (ATP) for used vehicles has stayed relatively flat because of the increased supply of near-new off-lease and off-rental vehicles hitting the market. The ATP for all used vehicle purchases in October climbed to $22,418, a 0.5% increase compared to $22,299 in September. The ATP for 3-year-old used vehicle purchases in October dipped to $24,007, a 0.3% decrease compared to $24,067 in September.
"Car shoppers might not see a huge dip in used prices, but the good news is that they'll definitely see a much wider variety of near-new vehicles with more desirable features available than they would have just a month or two ago," said Drury.