Where prices are heading
Shoppers and dealership owners alike still aren't sure what to expect from used car prices, but the dealers are leaning one way. More than eight out of 10 used car dealers (84%) anticipate a decline in used car prices and values this year, according to Startline research. Plenty of industry experts agree, tipping that cars, trucks and SUVs will keep falling in price through 2024.
The reasons aren't mysterious. New car production has picked up, which pulls demand away from used vehicles, and there's simply more used stock on lots. Then rising interest rates and inflation make finance dearer, so borrowing to buy a car costs more and that alone drags on what people are willing to pay. The result is steady downward pressure. It may not last all year. Some expect the market to settle towards the end of 2024 as supply and demand find a balance, though certain segments will keep moving faster than others.
The question everyone is asking is, when will car prices go down? Let's explore used car price trends that have emerged so far in 2024 and expert predictions on pricing through the rest of the year.
What it means if you're buying or selling
If you're buying, this is your moment. The used car market is collapsing in 2024, and falling prices mean your money stretches further. A newer model or a higher-end car that was out of reach last year might now be sitting inside your budget.
Selling is harder. Trade-in values are dropping, so getting a fair price is tougher and cars take longer to move, which means you may have to reset your expectations before you list and be patient once the ad goes up. If you're selling, keep an eye on what your car is actually worth. Tools like CarEdge Sell, Kelley Blue Book and Edmunds are worth checking often, because used values are shifting week to week and last month's number won't hold.
Before taking out a high-APR loan, check the latest 0% APR offers for new models.
How the year has played out so far
The falls landed exactly as predicted. Over the first nine weeks of 2024, prices dropped a little each week, a consistent decline rather than a one-off correction. The pace isn't uniform across body types, though. Cars, trucks and SUVs are all falling, but at different rates, which matters when a dealer is deciding what to put on the lot.
Wholesale has moved too, which usually flows through to retail. Average used car sales prices in Australian dealers fell a further 0.9% during May 2024 and are now 6.8% lower on average than this time last year. For dealers with room to buy, cheaper wholesale is an opening rather than a warning.
Dealers may find great vehicles at more affordable prices than last year or the year before. If you've been waiting for car prices to fall to stock up on more inventory, now is an ideal time to do so.
How dealers are playing it
That 84% figure from Startline says a lot about the mood on the floor. With used SUVs and sedans expected to see the largest price decreases, dealers are adjusting stock and sharpening prices to keep buyers walking in, and leaning harder on marketing to show off the value they've got.
Buyers are cautious even with prices down. They're better informed than ever, armed with online data, and hunting for the best deal, so the dealers who win are the ones being upfront and backing it with good service. The used car market has shifted dramatically over the last four years, and standing still isn't an option.
The economics underneath it
New car production sets the tone for the whole market. When factories run hot, new car supply rises and prices soften, and those factors don't just affect the new car market; they also drive price trends in the used car market. As new cars get cheaper, used ones generally follow.
Then there's the glut. When used supply outruns demand, dealers cut prices to clear stock. After an unremarkable spring buying season, sales are weakening and inventory is piling up. Last week wholesale prices dropped 0.49% in just seven days. Zoom out to the past month and wholesale markets are down one percent. That's not much on its own, but it's the trend that counts. New car incentives feed in too: when they're generous, buyers drift to new over used, softening used demand and used prices with it. Prices are still above historical norms, but they're grinding lower.
Elevated used car loan rates are a critical factor to consider when making purchasing decisions.
It's not the same everywhere
Where you are changes the picture. Urban markets tend to reprice quickly, with high demand and lots of transactions, while rural markets move slower on local supply and demand. Regions with strong new vehicle supply get healthier used markets, more choice and better affordability; areas in an economic downturn may see prices fall more slowly. Local quirks matter too, like a commuter-heavy region pushing up demand for fuel-efficient cars.
For people looking to buy a used car, you'll likely find your dollar going further and potentially be able to buy a newer model than you expect. The continued drop in used car prices is likely to extend into 2024.
Where it goes from here
Most signs point to prices keeping their downward path. Experts predict the trend holds through 2024, with affordability becoming the market's defining feature for buyers and dealers alike. There are risks that could knock it off course, from a broader economic downturn to swings in demand or supply-chain disruption, so dealers have to stay nimble.
The upside cuts both ways. Buyers can trade up to newer or better-equipped cars, and sellers can lean on the wave of buyers coming into the market chasing affordable used stock. To buy well in a market moving this fast, you want a full picture of the car in front of you. At Carify, our reports cover everything from finance checks to odometer comparisons, so you can avoid a bad buy and grab a good one by visiting our website today.
