When the pandemic hit, it didn’t take long for used car prices to rise. This was partially caused by a shortage of materials, like steel, that made new cars scarce for a while. Without as many new cars being produced, people had to turn to used cars, and of course the prices rose sky-high. Many people also bought used cars because they feared gas vehicles would be banned in the near future under clean energy initiatives.
Now that the pandemic is a few years behind us, the used car market is beginning to return to pre-pandemic lows. This is great news for buyers.
“Buyers looking for a used car right now have a good chance at getting the best deals we’ve seen in years,” says Tiger Okeley of Oak Motors. “Prices have fallen so low it’s absolutely a buyer’s market.”
Why used car prices skyrocketed during the pandemic
There were several factors involved in kickstarting the drastic rise in used car prices from around 2020-2023. The first of which was a shortage of raw materials that slowed down the manufacturing of new cars. Many raw materials are imported from China, and the Chinese government had locked everyone down to the point where manufacturers had to stop producing for long periods of time.
As the year progressed, new car sales continued to plummet because people just didn’t have the money to buy them. The pandemic forced thousands of people out of work, and many were unable to find unemployment. They couldn’t pay their regular bills, so taking out a loan to buy a new car was out of the question.
During that time, used car prices rose by about 40% at the highest point because the demand increased significantly. Even with higher prices, used cars were still cheaper than new vehicles. At that time, people routinely paid more than the Kelley Blue Book value for a used vehicle because they didn’t have a choice.
This didn’t just affect “gently used” vehicles, which are usually considered to be no more than four years old and sell for an average of $20,000. The pandemic affected the prices of used cars that would normally sell in the range of $5,000-$10,000, whether through a dealership or a private seller. People searching for a used car found out quickly that they had limited options and those options weren’t cheap. Many settled for any vehicle they could get at a reasonable price.
Another factor that had less of an impact was the threat of gas vehicles being banned under policies that were aiming for all electric vehicles by 2030. This played a minor role in increasing the demand for used cars.
Supply chain issues are smoothing out
Finally, the used car market is stabilizing since supply chains are catching up to current needs. New car production is in recovery, and people are finding work once more. Car dealerships are offering enticing incentives for consumers to buy new cars, and electric vehicle manufacturers are ramping up production, further causing gas vehicle prices to drop.
The used car market has been a rollercoaster
While it’s normal for used car prices to rise and fall, the high prices seen during the pandemic were unprecedented. Consumer behavior will naturally shift, but the way buying habits changed during the pandemic is different from any other time. Kelley Blue Book estimates that Americans bought over 36 million used vehicles in 2022 and just under that number in 2023.
This unusual shift in the market was mostly caused by a major economic downturn. People were either laid off from work or asked not to come back for a while, and a large number of people couldn’t even pay their rent. There were rent moratoriums put in place that stopped evictions for at least a couple of years, and people stopped spending money.
Pre-pandemic prices are returning
Most people prefer to shop for used cars over new cars, so people are happy to see pre-pandemic prices once more. As of April 2024, prices were down by 17% and the used car market appears to be stabilizing. Although, there’s no indication that people are going to start shopping for cars in high numbers, at least the prices have come way down for those who want to buy a used car at a reasonable cost.