The price of used cars is tumbling in spite of indicators that it shouldn’t be, Kelley Blue Book reports.
In the first 15 days of November, car dealers were paying 1.6% less for used cars at auction, and wholesale prices are down 5.3% compared to the year prior.
This is happening in spite of dealers having fewer cars to sell than what is considered ideal. Typically, wholesale price drops lead to retail price drops–but retail prices have already dropped.
Last month, the average used car price fell to $26,533, while dealers were reporting an average supply of 49 days worth of cars. Ideally, they would want 60 days worth.
While pickups are selling for about 4.2% less at auction than the year prior and SUVs for 4.8% less, compact car prices have fallen by 10.7%, and midsize cars have fallen 8%.
The explanation for these phenomena is that new car prices have been decreasing for months now. Though new car prices rose slightly last month due to the end of Tesla discounts and concerns over the UAW strike, Tesla is unlikely to suddenly increase their prices, and the strikes have not affected the supply of new vehicles.
This has helped the used car market, which has seen prices trend downward alongside new vehicles, in spite of a smaller supply. Nonetheless, car prices remain at an all-time historic high, which doesn’t appear to change anytime soon.