What’s Happening in New and Used Car Markets
The prices of new and used vehicles are falling, but not at all car dealers. Here’s what drivers need to know about current market trends.
With the Federal Reserve’s decision to cut interest rates, Americans are having an easier time borrowing money. For some, that means it’s time to head to car dealers and trade old cars for newer models. However, the situation isn’t always straightforward.
Some new car dealers are willing to negotiate, but used car buyers still face a more complex market. This article will offer an overview of what to expect when heading to the dealership.
Prices Are Down at Some New Car Dealerships
New car prices have been falling, but some buyers benefit more than others. The issue is that sticker prices aren’t coming down. Instead, more car manufacturers and dealerships are advertising hefty discounts.
Not all car dealers have the incentive to offer steep discounts. Popular brands like Toyota are still more challenging to find, and buyers shouldn’t expect discounted prices. Currently, Toyota and Lexus, Toyota’s luxury brand, have a supply well below industry averages.
At other car dealers, the situation is different. Most try to keep around 60 days’ worth of new cars available to customers with another 15 days’ worth on order. Many dealerships are well over that target, so they’re paying money to keep vehicles on the lot and may be more willing to negotiate.
A Complicated Situation for Used Car Buyers
At used car dealers, the situation is even more complicated. While prices fell in August, and the average used car price is now 6% lower than last year, prices fluctuate more significantly at used car dealerships.
The primary factor influencing the price of used cars at any particular dealer is what they paid for them at auction. Since the nationwide used car supply remains low compared to pre-pandemic times, shoppers still have trouble finding older, cheaper cars.
To complicate matters further, automakers have been more focused on premium vehicles in recent years. The era of inexpensive cars is coming to an end, and that is impacting used car pricing as much as new.
What to Expect From Trade-Ins at Car Dealers
One of the many advantages of buying from car dealers instead of private parties is that drivers can trade in their old vehicles toward the purchase prices of their new ones. Since used cars are still relatively scarce, buyers continue to get reasonable trade-in offers.
As with negotiating prices when purchasing new or used cars, drivers may want to shop around when trading in their old vehicles. Every dealership tries to keep a balance of vehicle makes and models available to buyers. It can pay to shop around.
The best way to maximize savings right now is to trade in a vehicle at a new car dealership offering competitive trade-in values and buying incentives. While used car dealers accept trade-ins, buyers are less likely to get steep discounts.
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