The used car market has seen a lot of ups and downs in the past few years. Prices and demand in 2021 and 2022 went up, while inventory on used car lots went down. The pandemic significantly impacted the used car market, but now that it’s behind us, what next? 2023 is looking much brighter; take a look at what we can expect.
Used Car Pricing Trends Expected in 2023
Towards the end of 2022, car buyers slowed down their used car spending. When the chip shortage and other supply chain issues caused a shortage of new car availability in 2020 and 2021, used car demand and prices dramatically increased.
Now that new car production is almost back up to normal, many car buyers are going back to buying their new cars instead of heading to used car lots. As demand for used cars decreases, so will the prices.
More Inventory to Choose From
Not only will used-car buyers find more affordable cars and trucks in 2023, but they will also have more inventory to choose from. This will make it much easier to find the right vehicle instead of just a vehicle. One of the best ways to determine inventory levels is by the average number of days used vehicles spend on used car lots. This number is steadily increasing, rising from 30 days in late 2021 to 46 days in late 2022. We can expect this number to go up even more in 2023.
While prices on used cars will continue to decrease, we shouldn’t expect a quick drop, and it may be a while before we see prices on used cars go down to pre-pandemic levels.
Used Car Buying Challenges in 2023
Watching used car prices continue to drop is a relief, but the challenge that many used car shoppers will face is rising interest rates. High interest rates, no matter what your credit score looks like, will impact your monthly car payment, and these rates are often higher for used cars than new cars.
What About My Trade-In?
So, with used car prices decreasing, you might wonder what it means for your trade-in value. When used cars were a hot commodity, dealers were paying top dollar for used cars to fill their lots. Now that inventory is easier to come by; you probably won’t get as much for your trade-in.
The good news is that dealers are still paying more for a trade-in than they were before the pandemic, just not as much as they were willing to shell out during the peak of the used car shortage.
What to Expect in 2023: The Bottom Line
If the current trends continue, shoppers heading to used car lots in 2023 will see the inventory barriers continue to lift and average prices drop. As these conditions improve, it’s important to prepare for new challenges in 2023, including higher interest rates and lower trade-in values. But overall, the used car market is looking much brighter for 2023 than it has in several years.
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