The used vehicle market heats up at the end of the year

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2022 will go down as one of the most special years on record for the US used car industry.

Consider that used cars made in the early 1970s have a higher average price than vehicles made in recent years or that the average price of a used car with mileage under 75,000 is close to 20,000 $. However, that number halves once the 75,000 threshold is exceeded, noted https://legaltemplates.net in a recent study.

Or consider the average price of a new vehicle in 2022 at $33,000 up from $26,700 in 2021, with an average dealer profit margin of $10,000 this year.

“Potential car buyers face the perfect storm,” Kunes Auto Group CEO Scott Kunes said at the time. “Federal Reserve interest rates have soared, inflation jumped, there is a shortage of cars and auto parts, and gasoline prices are at an all-time high.

As interest rates rise and consumer confidence plummets, Kunes sees new and used car sales slowing.

“The good thing is that there is still pent-up demand due to the Supply Chain crisis which should keep prices stable,” he said. “As manufacturers ramp up production, we’re seeing a return to discounts and incentive pricing to keep sales moving in the right direction.”

Other auto industry gurus see it the same way, although prices aren’t going back to 2021 levels anytime soon.

“The used car market remains in a state of flux,” said Kevin Roberts, director of industry analytics at CarGurus. “However, this is now a market where vehicle prices have started to decline from their all-time highs seen over the summer.”

For example, in October, the average listing price for used vehicles fell 1.8% to just under $31,000.

“Yet even with significant price declines over the past two months, prices are still up 3% from last year and remain up almost 35% from last year,” Roberts noted. “Prices are expected to continue falling in 2023, however, there is uncertainty as to how quickly they will fall and where prices will stabilize.”

Tips for Getting a Square Offer on a Used Vehicle

The good news is that there are still ways to save money on buying a car, especially if you follow these steps:

Find a local dealership that offers several financing options to meet your needs. If your credit rating is low, take steps to improve it.

“Also be open to discussing your budget and needs with your retailer,” Kunes told TheStreet. “Most people come to the dealership thinking they want a certain make or model, and most of those same people end up buying something completely different. Our customers can often find whatever they are looking for. in a car that better fits their budget.

Ask about interest rate subsidies. “Increasingly, manufacturers in the auto industry are responding to calls from consumer advocates for rate subsidy programs.

“While this is often a good deal for the consumer, they need to make sure they are working with a knowledgeable dealer who can fit their budget in the best way,” notes Kunes. “Often taking discounts and an unsubsidized rate will be beneficial in the long run, or a lease may present itself as the best option.”

Get ahead of the price curve. With prices falling, now is a better time to buy used cars than six months ago.

“To get the best deals now, budgeting and research are key,” Roberts said. “Create a list of “needs” and prioritize those needs before you start looking. “Some buyers may need great fuel economy above all else, while others will need to prioritize cargo space, for example.”

Once buyers know what type of vehicle to look for, “they can dive into reviews and start their search,” Roberts said.

Get pre-approved. Used vehicle consumers will need to determine how their new set of wheels will be purchased.

“A cash transaction is simple, but many buyers will need to finance their next vehicle purchase,” Roberts said. “In that case, get pre-approved financing before you go to the dealership. When budgeting, consider both the monthly cost of financing terms — a $300 monthly payment, for example — and the total cost of the vehicle during that loan.

Do your homework. Savvy used-car consumers will get vehicle history reports and pay for pre-purchase inspections before signing on the dotted line.

“Many dealerships will provide history reports for free, but paying for a pre-purchase inspection can be a form of insurance against a potential purchase headache,” Roberts noted.

Buy now or wait?

Should buyers wait until later in 2023 for used cars right now? It really depends.

“Buying now rather than later is a complex math for consumers,” Roberts said. “The key factors will depend on whether the consumer is looking to finance their vehicle or buy cash. Interest rates are expected to continue to rise in the months ahead.

The rate hike could offset any gain from the expectation of further price declines, Roberts noted.

“Also, used vehicle inventory levels are still lower than they were pre-COVID, so if you find the exact vehicle you want, consider buying now rather than waiting for a drop. prices,” he said.

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