It’s been a rollercoaster of prices for the car industry since the start of the pandemic.
“Every type of vehicle was eventually drawn way higher than its price because of the pandemic and because of the supply chain issues which kept new car production down and forced people to buy either the rare new cars or all the used cars that were out there because they couldn’t get new," said Karl Brauer, iSeeCars.com Executive Analyst.
Now there’s a shift happening. Used car prices are dropping although they're not quite back to what they were before.
“You had both supply and demand push prices up during the pandemic and now you have supply and demand both moving in the direction to let prices come back down," Brauer added.
According to a recent report by iSeeCars.com, the average used car price was down by more than $1,000 in December, marking the first substantial drop in more than two years.
Used car prices fell 2% in November and 3% in December, according to iSeeCar.com data.
“Demand is still there for sure. We’re definitely seeing people coming out. They aren’t as sticker shocked as they were two years ago," said Chris Wesney, McCarthy's San Luis Obispo General Manager.
The drop in prices is due to a number of factors. Supply chain issues that we saw during the pandemic aren’t as bad and high interest rates are lowering consumer demand.
“Some of the shoppers we expect to be coming out at this point are a little hesitant because of high interest rates, although the interest rates we’re seeing on used cars aren’t high enough to make a big difference," Wesney explained.
Car experts expect to continue to see a drop in prices in the next 6-12 months which can possibly mean better deals for the new and used car markets.
“People on the sidelines who have been waiting can at least start to consider a car purchase and maybe start doing some research," Brauer said.
“Being a small independent dealer we’re able to roll with the punches. The biggest thing we’re focusing on right now is buying inventory. We try to buy as much as we can from local individuals so we’re really making that push," Wesney said.
As you begin your car search, experts recommend you do some research ahead of time to see which cars are holding their value and be flexible.
