While used EV prices are starting to get much more affordable, the pre-owned market for other models still really stinks. Due to production shortages from the pandemic, there aren’t as many used models on the market and that means most buyers are looking at much older models in order to maintain their budget.
According to a study conducted by iSeeCars.com, production restrictions from 2020-2022 have resulted in fewer lightly used cars on the market, and therefore the average transaction prices for these models have increased dramatically. Essentially, what this means is that someone shopping for a three-year-old car in 2023 is likely to pay thousands more for it compared to 2019. Another way to view this is that someone with a budget of up to $24,000 is now looking at a six-year-old car when they used to be able to score something well within the warranty period.
This data was gathered using the following methodology:
iSeeCars analyzed over 21 million used cars sold between January and August of 2019 and 2023. The share of cars from each model year, as well as their prices, were aggregated to determine the change in share and price by age across the two periods. The average price of 3-year-old cars in 2019 was also compared to prices from all ages in 2023 to determine the price with the smallest absolute difference from the 3-year-old 2019 price. Similar data was then obtained and aggregated at the model level, excluding heavy-duty vehicles and low-production models.
Keep in mind this is a statistical average based on overall sales. This does not mean that you can’t find a specific three-year-old model under $24,000 it just means that the frequency and availability of those cars within that segment have shrunk. And when you look at the average price changes for cheap cars, that market is even tougher.
A few years ago buyers with a budget between $10,000 - $15,000 could easily buy a three-year-old compact car. Now that budget means that most of those same cars are eight or nine years old.
While increased production and availability of new cars should continue to have a cooling effect on cars in that $25,000 segment, with more brands abandoning their cheap models, that sub-$20,000 market will continue to be a challenge for some time.
Tom McParland is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He takes the hassle out of buying or leasing a car. Got a car buying question? Send it to Tom@AutomatchConsulting.com