When it comes to getting into a used vehicle, drivers will tell you that the past couple of years have been a whirlwind. Sky high automotive prices have seemingly baffled consumers wanting to get into a used vehicle at an affordable price. What once seemed like a viable solution became at times unattainable.
Between absurdly high prices for used cars, and the very limited inventory available, many have wondered when the automotive market will go back to normal or at least simmer down. Well, it appears that the time has come.
The Future Looks Bright If You’re Looking For a Used Vehicle
What’s caused high used vehicle prices and what’s changing now? Let’s take a look at why you’ll likely start seeing the price of a used vehicle drop over the next couple of months.
Corrections in Supply Chains
While global supply chains are still facing uphill battles, it’s nowhere near the extent it was during the pandemic. As supply chain issues continue to correct themselves, consumers are slowly starting to feel the impact. In the automotive market, this means more available vehicles. And when there is more supply, prices naturally begin to drop.
Inflation Catches Up with Auto Sales
Inflation is hitting consumers in nearly every aspect of their lives. This spike in inflation coupled with a variety of economic factors helped push used vehicles to appreciate nearly 40% higher than this time in 2021. As inflation has seemingly hit a peak, these high-appreciation values have begun to cool down a bit. The price of a used vehicle in early 2022 was still higher than in previous years, but prices have since begun to slowly tick down. For many consumers, this is welcomed news as they can look forward to a continued slump in the cost of a pre-owned vehicle. For consumers shopping for a new or used vehicle in today’s market, this means price tags that are a lot more appealing than just over a year ago.
Vehicle Repossessions See a Rise
Unfortunately, as interest rates began to climb and inflation hit an all-time high, many Americans struggled to keep up with payments, auto payments included. According to a Gallup survey, roughly 45% of Americans detail that they’ve struggled with finances as a result of inflation. It’s not just lower-income families that are getting hit hard, but families in the middle class as well. As a result of these financial struggles, many dealerships are reporting increased rates of repossession. As these repos help to address supply issues, the price point of used vehicles are being pushed down.
Who’s Getting Hit the Hardest?
It may come as a surprise that SUVs and luxury vehicles are seeing the biggest price drops and repossessions. The price of pre-owned luxury vehicles and SUVs skyrocketed over the past couple of years as the value of used inventory exploded. Over the past couple of months, however, these prices have begun to wane. As inflation continues to be an economic concern, many Americans simply can’t afford or no longer want to hang on to their SUVs or luxury vehicles.
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