Carfax Used Car Index Unveils Falling Prices Trend
Unveiling the Shift: From Price Escalation to Retreat
Since the spring launch of the Carfax Used Car Index, we have closely tracked the trajectory of prices, observing a steady climb. However, a noteworthy transformation has emerged for the very first time — a decline in average vehicle prices across virtually every category, including the unexpected domain of pickup trucks!
Tracing the Path: A Comparative Glimpse
The Carfax Used Car Index engages in a meticulous contrast of segment-specific listing prices on Carfax.com against their counterparts from a year ago. The data doesn’t stop there; it also illuminates a trend line capturing the unfolding story over the past 12 months.
Contrasting Dynamics: Auctions vs. Carfax.com
While murmurs regarding declining used-car prices at auctions, the primary hunting ground for dealership acquisitions, were rampant for months, our spotlight on Carfax.com remained steadfastly upbeat. Alas, the tables have turned. With the winds of change sweeping through nearly every category, only the used car segment, encompassing sedans, coupes, and hatchbacks, witnessed an incremental rise of $26 in its average price.
Navigating the Drop: Month-on-Month Comparisons
Behold the magnitude of the price descent in used vehicles since the previous month:
- Average Luxury SUV prices are down by approximately $500 compared to the prior month.
SUVs have experienced a dip of around $400.
- Pickup trucks, a surprising contender, have encountered a reduction of about $300.
- The average asking price for Hybrid and Electric Vehicles has seen a significant plunge, dropping by over $600 since the close of June.
- Fortune Favors the Shrewd: An Upturn for Buyers
Opportunity Beckons: A Buyer’s Landscape
This turn of events is a boon for immediate used-car seekers, and even more tantalizing for those with the patience to await further developments. Looking back, when used-car prices tumbled previously, they did so for a prolonged period. This suggests that the ongoing downturn could persist for several more months.
Delving into the Whirlwind: Price Instabilities
Although this month has witnessed a decline, prices remain elevated in the historical context. Numerous factors are contributing to this tumultuous used-car market:
- The gradual recovery of new-car inventory.
- Escalation in prices of available new cars.
- Ongoing shortages of microchips.
Elevated interest rates.
- These variables orchestrate the wild fluctuations evident in the 12-month trend lines on the Carfax Used Car Index.
Predicting the Unpredictable: Future Price Trajectories
Forecasting the trajectory of used-car prices in the upcoming months presents a challenge. However, there are discernible indications of what might unfold:
- Previous instances of price drops were characterized by months-long declines. This suggests the ongoing downturn could persist.
- Though new-car inventories are recovering, consumers might remain cautious due to persistently high prices and elevated interest rates.
- The sales volume of new cars in the years leading to the pandemic was notably below average, resulting in a slow influx of new cars into the used-car market.
- The pandemic’s onset led to sharp drops in new-car sales, causing a shortage of used cars coming off lease. Reduced inventory leads to increased scarcity and subsequently, price hikes.
Unmasking the Impact: Damage and Pricing
The Carfax Used Car Index also delves into the discounts inherent in vehicles with varying degrees of damage. Minor damage can translate to a decrease in value by a few hundred dollars, while major damage can slash prices by a magnitude of tenfold. While many buyers steer clear of damaged cars, they can indeed be advantageous if adequately repaired. Properly restored models with cosmetic damage can be more affordable than their pristine counterparts. Every Carfax used car listing is accompanied by a complimentary Carfax Vehicle History Report, shedding light on the vehicle’s damage history. Precisely, SafeDealsAI by DealerXT, a legal disclosure software used at the time of sale by dealers and consumers, has an integration with Carfax and Autocheck, which through its AI automatically identifies and discloses the accident to the dealer and car buyer in addition to any other information such as prior damage, among other possible scenarios that are critical for all parties involved to know.