In the volatile world of used car sales, August brought a glimmer of relief for prospective buyers since the average listed price for a used car dropped by 1.4% in the United States. The average used car cost in August was $26,651, which was 1.4% less than July. This marks a three-month decrease from June prices, which decreased by .5% in July.
Though this may be good news for those in the market for a used car, experts at Cox Automotive warn that this downward trend may not last long since the nationwide supply of used vehicles shrank because of August's high sales.
A Decrease in Used Car Supply
According to Cox's data, American car dealerships currently have 2.25 million used cars in stock, which sounds like a lot, but it's actually a 9% decrease from this time last year.
This depletion is significant, and to put it into perspective, dealers would run out of used cars to sell in just 44 days if they could not restock more. These numbers are not as low as we saw at the height of the pandemic; they are still below dealer's preferred inventory levels.
The COVID-19 pandemic significantly impacted the automotive industry, and approximately 8.1 million fewer cars were sold than what would have been sold under normal circumstances. Since these new cars were never produced or sold, those vehicles will never enter the used car market, which experts are guessing will result in higher used car prices as the months move on.
Unexpected Sales Pick Up in August
Chris Frey, Senior Manager of Economic and Industry Insights at Cox Automotive, noted, “Used-vehicle inventory had been increasing after hitting a low point in March. But that increase in inventory stalled in the middle of July and into August, as sales unexpectedly picked up.”
This is still good news for those looking to sell a used car. While the price may have dropped, the demand for used cars is still very high, especially for cars under $10,000 or used cars from Honda, Subaru, Toyota, Nissan, or Hyundai.