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The used car market displayed a complex picture in January 2024, with positive signs like rising monthly sales countered by a year-over-year decline. Here's a breakdown:
Uptick in Sales: Compared to December 2023, used car sales experienced a healthy 4.7% increase, reaching 1,354,075 units. This represents the highest volume since August 2023, suggesting a potential uptick in demand.
Inventory Levels Drop: The increased sales effectively reduced inventory, pushing the days' supply down to 49 days, a significant improvement from January 2024's initial 58 days. This tighter supply could influence future pricing.
Year-Over-Year Dip: Despite the positive monthly trend, January 2024 sales were 3.1% lower compared to January 2023. Potential reasons include the harsh winter weather and elevated auto loan rates, which may have deterred some buyers.
Price Relief: On a brighter note, retail prices for used cars saw a roughly 4% decrease compared to 2023. This could make them more affordable for buyers, especially with the approaching tax season potentially boosting purchasing power.
Flat CPO Sales: The certified pre-owned (CPO) segment saw stagnant sales in January 2024, with an estimated 201,621 units sold, unchanged from December 2023. While this might seem concerning, it's important to remember that CPO sales had improved throughout 2023 due to increased inventory and expanded eligibility.
CPO Growth Expected: Looking ahead, Cox Automotive predicts a positive outlook for the CPO market, forecasting sales to reach 2.7 million in 2024, representing a 7% increase from 2022. This suggests continued growth and potential for dealerships to capitalize on this segment.
Overall: While the used car market navigates challenges, January 2024 offered some encouraging signs. Rising monthly sales, declining prices, and a potentially stronger tax season indicate potential for a positive year. However, ongoing concerns regarding affordability and economic factors remain.
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