While the prices of late model used cars are down only 5% off their peak according to Edmunds, the price of older used cars, those five years or older, have fallen 15% or more from their peaks early in 2022. The leading reason for the drop in used car prices is the increased supply of new cars.
The run-up in used car prices was a major driver in the nation’s overall inflation rate, adding about a full percentage point to the overall increase in consumer prices. Now it’s a factor helping to bring down the pace of inflation, shaving more than a third of a point off the overall rate in December.
This is obviously good news for those wanting or needing to buy a used car, though it can have a negative effect on car buyers by reducing the value of vehicle they hope to trade in.
