As we’re halfway through Q1 2023, people are eagerly looking at used car market sales numbers to see if the worst is finally truly over. And while the numbers don’t lie, experts have hotly debated what they actually mean. Is a slight increase a sign of regular fluctuation in a healthy market, or should we prepare for a new record high in prices? Does a dip mean prices of used cars will continue to drop, and is that actually a good thing?
How Last Year’s Numbers Help Predict This Year’s Used Car Sales and Stats
The issues started all the way back at the beginning of the pandemic in 2020—social distancing and health concerns caused even manufacturing plants for cars to shut down. Combined with a microchip shortage, this resulted in fewer new cars for years. And with fewer new cars, used car prices skyrocketed—they didn’t begin falling until midway through 2022.
The peak and steady fall in the price of used cars throughout 2022 tell us what the ceiling is—it also shows how closely tied value and demand are. So based on the current reduced demand for used cars, we can assume that prices will continue to fall—or if they go up, they won’t be by nearly as much as it was in 2020 and 2021.
That said, what kind of numbers have we been seeing in January and February 2023 that support this?
What We’ve Seen So Far in 2023—and How it Could Change
According to the Manheim Used Vehicle Value Index, used car values have increased by 2.5% since December 2022. But as far as many experts are concerned, this is perfectly normal. When demand for used cars went down, so did their price. Now that demand has picked up again for cheaper used vehicles at the beginning of 2023, the prices have increased slightly—it’s just a regular market change.
The only question is: does this regular market change mark an upward trend of increasing used car prices, or will the prices go back down, and the market restabilize?
Will the used vehicle market ever go back to how it was before the pandemic?
Predicting the Rest of 2023’s Used Car Market Changes
The honest answer is that it’s too soon in 2023 to know whether used car prices will climb or fall further in the rest of the year—the market has just started recovering. We know now that the current increase is normal, and it’s very unlikely that prices will get as high as they were in 2021 and early 2022 any time this year.
And the good news from experts is that, yes, the automotive market will go back to how it was before the pandemic—it’ll just take a bit longer to settle back down. So keep your eyes peeled for deals at your local dealership, and keep your ears open for more
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