Used car market shows signs of (cautious) optimism

Author

Anna del Villar
July 22, 2024

After a rough June that saw both new car sales and inventory fall thanks to software outages and power loss from severe weather, it seems the used car market is feeling the pinch too – but to a lesser degree. 

Driving the news: As of July 8, there were 2.08 million used vehicles on dealer lots across the U.S., including both franchised and independent dealerships, according to Cox Automotive. This is down approximately 170,000 units from the number available at the beginning of June, though it remains flat compared to July of last year.

What’s more: According to vAuto Live Market View data, used car sales at dealerships dropped 7.6% from May to June. Yet, there's a silver lining – compared to June 2023, sales were actually up 1.41 million units, or 1.4%.

Why it matters: Even though used car sales dipped, the number of cars on dealer lots stayed somewhat steady. This mismatch pushed the average days' supply to 53 days. While that's an increase of 7 days from June and 4 days against this time last year, it's not as dramatic as the jump in new car days' supply, which went up a startling 40 days in a single month.

The good news: While finding a bargain car under $15,000 remains a hurdle due to limited supply, the overall market shows signs of improvement. The average price point for used cars is now similar to what was seen in the summer of 2021, offering a more accessible entry point for many consumers.

  • In June, the average listing price for a used vehicle settled at $25,251, marking a decrease from both May's price and a 7% drop compared to June 2023.

  • The top five selling used car brands – Ford, Chevrolet, Toyota, Honda, and Nissan – boast an average price of $23,833, which sits comfortably below the overall market average.

The big picture: Delayed reporting has made it difficult to accurately measure the full impact of the disruption dealers faced in June. Regardless, auto retailers now walk a tightrope walk of recovering lost sales, balancing their inventories, and mitigating holding costs. But a drop in prices could spur demand, leading to a sales surge later this quarter.

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