DEARBORN, Mich. (AP) — For months, anyone who wandered onto a dealer lot to look for a used car could be forgiven for doing a double take — and then wandering right off the lot.
Prices had rocketed more than 40% from their levels just before the viral pandemic struck, to an average of nearly $25,000. The supply of vehicles had shrunk. And any hope of negotiating on price? Good luck with that.
But now, a sliver of hope has emerged. The seemingly endless streak of skyrocketing used-vehicle prices appears to be coming to a close.
Not that anyone should expect bargains. Though average wholesale prices that dealers pay are gradually dropping, they’ll likely remain near record levels. So will the retail prices for consumers. Supply remains tight. And while demand has eased a bit, a steady flow of buyers could keep prices unusually high for a couple of years more.
“It’s a short-term correction,” suggested Paul Sugars, sales manager for pre-owned vehicles at Jack Demmer Lincoln in Dearborn, Michigan.
Sugars should know. As internet and foot traffic at his dealership fell in the past few weeks, he began to cut prices on some of the 70 used vehicles on his lot.
With buyers now returning, experts are led to suggest that demand will be high enough to keep used-vehicle prices from falling significantly. One reason is that supply is still low. According to Cox Automotive, dealers last month had only enough vehicles to meet demand for 34 days. Some of the price increases were fueled by government stimulus payments.
Few think the slight easing of used-car prices heralds any slowdown or reversal in overall inflation, though.
Retail prices for used vehicles surged so high that in April, May and June, they accounted for about one-third of the entire increase in the U.S. consumer price index. In June, used prices rose a record 10.5%, helping to drive inflation to 5.4% compared with the same month a year earlier. That was the highest such increase since 2008.