ALEXANDRIA, Va.—Used vehicle prices dropped in April for the first time in 2023, reports CNBC. There was a 3% decline in prices from March to April, according to Cox Automotive, due to an increase in production of new cars and trucks by automakers.
Although used car prices have slid, they are up when compared to historical prices. April prices were up 5.2% compared to December but down 4.4% year over year.
“We’ve experienced eight straight months of year-over-year declines, averaging 8.3%, and it’s likely not over yet,” Chris Frey, Cox senior manager of economic and industry insights, said in a release.
COVID-19 caused used car prices to rise, as supply chain issues caused production of new vehicles to decrease, leading to record high prices for new vehicles. Consumers then turned to used cars, driving prices up for those as well. Early last year, the Biden Administration said much of the increase in inflation was because of the used vehicle market.
The average list price for a used vehicle in February was $26,086, which was down slightly from January.
“Prices have been falling, but the tight supply might be providing some price support,” Charlie Chesbrough, Cox senior economist, told CNBC. “Used prices may fall further, but it seems unlikely a massive decline will happen given the supply situation.”
U.S. auto industry sales slumped last year, with the worst sales in over a decade due to supply chain issues and low inventory levels at dealerships. In the U.S., 13.7 million vehicles sold last year, the lowest amount since 2011, declining 8% year over year. Sales were around 17 million in the five years leading up to 2020.