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The used vehicle market is up and running again after getting a jump-start from easing prices that have lured consumers holding out on making a purchase the past few years, a new report from Edmunds found.
The car shopping guide on Tuesday published an analysis indicating the combination of increased supply and cooling prices is luring previously hesitant buyers back to dealerships, where used vehicles are selling at record rates.
Used vehicles for sale at a dealership in Richmond, California, on Feb. 21, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Edmunds’ director of insights, Ivan Drury, noted that the average trade-in age for both new and used auto purchases is on the rise. He says this indicates the return of a growing number of consumers who sat out the market while prices were sky-high.
Drury said that the widening gap between new and used prices is pushing more shoppers to purchase used vehicles.
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"Consumers making their way back into the market after a number of years away are likely experiencing some sticker shock when shopping for new vehicles and, therefore, more thoroughly evaluating their purchase options," Drury wrote.
Used vehicles for sale at a dealership in Colma, California, on Feb. 21, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
"But the majority of new vehicles are far less likely to appeal to these buyers — they’ve waited for years to make a move, and are likely a bit more price-sensitive than the consumers who were willing to pay above MSRP at the height of the shortages.
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"Until new car incentives make a real comeback, used vehicles will continue to offer what new vehicles cannot: affordable transportation."
Edmunds' data is not the only evidence used car sales are seeing a boom.
A Carvana used car "vending machine" in Miami on May 11, 2022. (Joe Raedle/Getty Images / Getty Images)
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CVNA | CARVANA CO. | 248.24 | +3.86 | +1.58% |
Carvana Co.
Online used car dealership Carvana, which was feared headed for bankruptcy when its stock hit its low in December 2022, has seen a titanic rise in its share price since that time as high interest rates prompt consumers to look for deals on secondhand cars instead of buying new vehicles.
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Carvana's share price is up more than 147% year-to-date after an 11-fold rise last year.