Used vehicle market: Why are old cars getting so expensive?

Author

Colin Velez
July 25, 2024

Consumers are turning to older used vehicles in an effort to save money in today’s challenging market. Unfortunately, new data suggests they may be better off waiting for prices to normalize.

How the used vehicle landscape is changing:

Old vehicles have quickly become a popular choice for price-conscious buyers in search of a good deal.

Over the last four years, the share of cars on the market, built at least a decade ago, has risen from around 15% to 23%, according to iSeeCars. The most popular models in this age group continue to be sedans, hatchbacks and wagons.

But customers may not be saving the money they used to by shopping for an older model. In that same timeframe, the average price for a 10-year-old vehicle jumped roughly 33% to $12,194 this year. That’s still a little better than last year, but only by $36. It also represents faster growth than the average transaction price increase (around 20%) we’ve seen for new vehicles since 2020.

Despite their growing market share, older cars are also becoming difficult to find. Cox Automotive inventory data for July indicates that used vehicles priced below $15,000 saw a days’ supply of 39 days, 35% lower than the market. Unfortunately, buyers aren’t left with many options.

What’s driving these supply troubles: Low vehicle production during COVID-19 has translated into a shortage of cars aged one-to-three years entering the preowned market. Without the typical influx of supply, dealers and consumers are forced to make do with what they have, which in this case is an aging population of pre-pandemic models. As model age continues to rise, car owners will start to face growing service and maintenance costs, putting further pressure on their personal finances.

Bottom line: Certain elements of the auto landscape have become more consumer friendly since the end of the pandemic, but buyers are still faced with difficult choices due to ongoing factors like low used car supply and high interest rates. That being said, shopping older is still a reliable way to save money and can unearth some great deals, as long as consumers’ expectations are in line with the market.

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