The days of being able to drive a new car for a couple of years and trade it in for the original price or even more look like they are quickly coming to an end.
Nationally, used car prices were down 3%, or $1,043, in December compared to a year earlier, which followed a 2% annual decline in November, the first time used car prices had moved lower since June 2020, according to a study from iSeeCars.com. In Denver, the average decline in December was 1.4% or $509, which ranked 15th out of the 50 metros tracked.
“Used car pricing will drop for the foreseeable future, with the only variable being how far and how fast. The decline in used car pricing will be heavily dependent on economic factors, and how severely those factors impact demand,” said Karl Brauer, an executive analyst at the online website and the study’s author.
The study defined a used car as one between one to five years old. Supply shortages, combined with strong consumer demand, drove used car prices higher for the past two years through November, in some cases to the point where lightly used models went for more than the brand-new version. And while the new car supply hasn’t fully recovered, financing costs are rising and demand is softening, which is weighing on used car prices.
“If overall economic confidence drops substantially in the coming months it will be reflected in a substantial decline in used car values. This drop could easily bring pricing back to pre-pandemic levels, or even lower, depending on how much financial pain the average consumer is facing,” Brauer said in an email.
The declines that started to emerge late last year are uneven, however, with luxury cars tending to suffer bigger price declines. In metro Denver, the used model taking the biggest hit in value last year was the Porsche Cayenne, which suffered a 19.3% decline or $16,813 in value. The Ford Mustang was down 18.8% or $6,482 last year. The Ford Expedition MAX was off 16.9% or $9,964, while the Jaguar F-Pace dropped 16.6% in value or $7,036 on average.
The Tesla Model 3 also saw a big decline, 15.6% or $8,460 in Denver, which was larger than the 11.6% decline measured nationally over the past year.
“It’s common for high-priced used luxury cars and electric vehicles to suffer the biggest declines in value during a recession. When buyers feel less confident about spending money they tend to go with what they know, which means lower-priced, mainstream models versus higher-priced luxury cars and electric vehicles,” Brauer said.
Among the models that saw the biggest price increases last year in metro Denver were the MINI Clubman, up 39.6% or $9,547; the Chevrolet Corvette, up 22.9% or $17,190; the Nissan LEAF, up 22.5% or $5,185; the MINI Hardtop 2 Door, up 20.3% or $4,878; and the Cadillac Escalade ESV, up 18.9% or $12,430.
Denver’s list of top gainers differed from the U.S. list, where the Toyota Prius Prime had the largest gain among used models at 22.5% and the Clubman ranked fifth with a 14% gain.
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