If you’re shopping for a used car, there’s good news. Used car prices are beginning to drop after months of record high levels. Earlier this year, analysts said that used car shoppers should expect to pay more due to higher demand and lower inventory levels.
In February, the National Automobile Dealers Association (NADA) Used Car Guide predicted that used car prices would peak in April and May. While this was good for consumers who wanted to trade in or sell their vehicle, used car buyers were paying more than usual.
New pricing data from ADESA Wholesale Vehicle Auctions shows that the average wholesale price that dealers pay for a used vehicle in May declined $306 compared with April, CNBC reports.
USA Today says that average wholesale prices for used vehicles are “down 1.8% compared with a year ago.”
Several factors are contributing to the decline in used car prices. More consumers traded in their used cars when they recently purchased new vehicles, which boosted inventory levels. Also, used car prices were so high that some shoppers opted for a new vehicle because it didn’t cost much more than a comparable used model. Some analysts attribute falling gas prices to the decline in used car prices in some vehicle segments. CNBC also points to competitive manufacturer incentives for new cars, like cash rebates, interest-free financing and low interest rate deals.
NADA estimates that used vehicle prices will fall 3 percent in July, but overall, used vehicles will see a price increase of 0.7 percent from June through December.
If you’re shopping for a used car soon, analysts say that you shouldn’t expect massive savings, but that you should have more wiggle room in your negotiations. “It's important to note that used-car prices will remain at historically high levels through the end of the year, despite the expected seasonal softening,” Jonathan Banks, senior analyst with the NADA Used Car Guide, said in a statement.
Shopping for a used car? Check out our Used Car Listings, where you can browse more than a million used vehicles for sale in your area. Then, look for a great deal on a new car by checking out this month’s best car deals. You can also find the best local prices in the area by using our Best Price Program. Also, be sure to follow us on Twitter and Facebook.