- Used car prices skyrocketed during the COVID-19 pandemic.
- The market has improved, but it's never coming back down to pre-COVID levels, per Cox Automotive.
- Blame a decrease in leasing and drivers holding onto their vehicles for longer.
Since the start of COVID, the used car market has been volatile, with pre-owned vehicles priced far higher than they might have been worth. Unfortunately, even as used-car supply improves, it's likely they'll never return to pre-pandemic pricing, experts at Cox Automotive say.
The average list price for a used car these days is hovering at $27,266, according to Cox. That's down quite a bit from the $28,050 price tag they saw around this time last year — but it's up 38% from a pre-COVID average of just under $20,000.
Cox analysts predict the used-car supply will start to recover around 2025. But it won't be back to 2019 levels until 2028, and they don't think costs will ever normalize, even as the supply of these vehicles does.
"The math suggests historically that the average used car price next year will be higher than it is today," Jonathan Smoke, chief economist at Cox, said during a mid-year review in June.
"When are we going back to 2019 prices? That's a softball question," Smoke said. "The answer is never."
3 key factors to blame for the used car price problem
Leasing has been down in recent years. It used to be that leases made up about 30% of the auto market, but since the pandemic hit, that's down to around 17%, impacting the off-lease vehicle supply entering the used car market.
Drivers are holding onto their vehicles for longer, also affecting which cars end up sold as used and in how much time.
And the high-profit vehicles that automakers have been prioritizing and selling over the past several years take longer to become affordable in the pre-owned market.
Only 30% of used vehicles sold for less than $20,000 in the first quarter of 2023, according to resource Edmunds — half of the 60% of used cars that were sold at that rate or below in 2018. Meanwhile, cheap new cars have been practically extinct.
"What we've been producing over the past three years has never been more expensive," Smoke said.
What to expect
Car companies are starting to get back to producing more lower-end vehicles, which will be good news for the used market, one day.
Meanwhile, if you bought a new car at the peak of the supply-and-demand scare during the pandemic, you might want used car prices to stay resilient because that could impact your trade-in value someday. Some car owners are finding that they paid over sticker price for a new car in the past three years and now it's worth nowhere near that as used.
