After sitting on the sidelines for the past few years, buyers are returning to car lots, ready to buy. A new report from Edmunds says the used-car market is flourishing with vehicles “flying off dealer lots at record rates”—and a lot of those buyers are likely to face sticker shock.
The average age of trade-ins for both new and used vehicles is starting to rise, the appraisal service reports. That indicates a shift in buyers, as people who have held off on buying a car in the last few years are finally taking the plunge. A reduction in used-car prices is likely one of the incentives bringing them back.
The average used car in the first quarter of this year sold for $27,113, which is a 4.5% drop from the same time period a year ago. Still, buyers who are expecting deals will need to brace themselves, as prices remain nearly 34% higher than the 2019 average of $20,247.
New car prices, meanwhile, dropped to $46,992 in the first quarter, the first-time average transaction prices have been below $47,000 in nearly two years.
The influx of older used cars is an optimistic sign for the industry, though. In the first quarter of 2022, the average used car trade-in was 7.9 years old; in the just completed quarter, it was 9.4 years old. That means more affordable vehicles are about to be available to buyers, which could give the overall industry a boost.
New vehicles are less likely to benefit from this rush, though. As shoppers digest the higher prices, they’re increasingly opting for newer used vehicles instead of new cars and trucks. And Edmunds says that’s not likely to change soon.
“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,” the report reads. “Until new car incentives make a real comeback, used vehicles will continue to offer what new vehicles cannot: affordable transportation.”