Spring Sales Slowdown
The used car market is witnessing a significant increase in inventory levels despite a 6% year-over-year price drop. A less-than-stellar spring sales period, which typically benefits from tax refunds, has led to this inventory build-up
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USED-VEHICLE INVENTORY VOLUME AND DAYS’ SUPPLY
Current Inventory and Prices
As of early May, used car inventories reached 2.27 million units, a 6% rise from last year. The average listing price rose slightly to $25,571 from April but remains 6% lower than last year. This increase is partly due to consumers delaying purchases, waiting for better deals amid economic uncertainties
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| AVERAGE USED-VEHICLE LISTING PRICE |
Market Dynamics
The slower-than-expected spring sales have increased the days’ supply to 46, indicating more cars are available than being sold. The spring season usually boosts sales due to tax refunds, but this year, that boost was muted. Analysts attribute this to tighter consumer budgets and higher interest rates, making financing less attractive
Regional and Price Segment Variations
Lower-priced used cars under $15,000 are in shorter supply, with only 36 days’ supply. This segment is particularly strained, highlighting affordability challenges for consumers. Additionally, the Southern U.S. has the lowest days’ supply among regions, indicating regional disparities in inventory levels
Economic Factors and Consumer Behavior
Economic factors such as inflation, rising interest rates, and high new car prices are influencing the used car market. Consumers are becoming more cautious with their spending, leading to longer holding periods for vehicles and more inventory buildup. This situation is creating a more favorable market for buyers, who can expect better deals and more options
Future Outlook
The growing inventory and slight price increases signal a potential buyer's market, yet affordability remains a concern, particularly for lower-priced vehicles. The used car market's performance in the coming months will likely depend on broader economic factors and consumer demand shifts. If economic conditions improve, the market could see a rebound in sales, stabilizing inventories and prices
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