In the first half of February, the wholesale price for used cars went down. This is the price that dealerships pay at auction, so it’s good news for car shoppers as the wholesale price drop usually translates to a retail price drop in a month or two. The news was revealed by Cox Automotive, which owns the giant Manheim car auction.
Is It Time To Buy Used Cars?
The wholesale price drop is about 0.2% lower than it was this time last year. Admittedly, that’s not a huge drop, but it’s still good news as the demand for used cars tends to peak in the late winter and early spring. The average list price for used cars also dropped in February, but the overall supply across the country for used cars is lower than normal.
It may be a good time to buy simply because prices might get harder to predict in the near future as the Trump administration has proposed several rounds of tariffs against various countries, including Canada and Mexico. This could push the average new car price up by about $3,000 per vehicle. Since an increase in new car prices tends to also raise the prices for used cars, it might be a good time to buy before that happens.
Quick Facts About Buying and Selling Cars Right Now
The sales price of new cars and used cars has dropped recently, but that’s only one reason why shopping for a car makes sense right now. A temporarily good credit market has also cropped up and there is considerable uncertainty about tariffs in the future that might raise prices. If you’ve been thinking about buying a car soon, now is probably a good time.
However, if you’re only on the fence about buying a car, you probably shouldn’t rush into a purchase just based on these details. If you’re thinking about buying a new car, prices have fallen by 2.2% as of January. However, this is still 1.3% higher than last year. On the other hand, it’s easier to find a good deal right now thanks to incentives.
Some brands are overstocked with new vehicles, but other brands like Lexus, Toyota, Honda, and Acura are dealing with lower inventory than usual.
Good News For the Credit Market
If you’re like most Americans and plan to borrow money to buy a new or used car, there’s good news in the credit market. The Federal Reserve cut rates three times last year, which means better rates are available for consumers right now. The good news is somewhat temporary since the Fed originally said it would cut rates throughout 2025, but then dialed that projection back.
In other words, rates are now expected to only move about half a point this year. If you’re in the market for a used car, prices are down as mentioned earlier, but they might go up if the price of new cars increases. It’s also no secret that the used car supply will likely stay thin for years thanks to the 8 million cars that weren’t built during the pandemic.
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