Recent auto industry reports show that while used car prices have made steady declines in early 2022, overall prices have remained at an average of $31,450. In a June market analysis from car shopping app CoPilot, it was reported that the decline of used car prices is likely to accelerate in the coming months. According to a recent Cox Automotive report, certified pre-owned car sales were down 22 percent in May compared with a year ago.
Despite the recent decline in prices, the Cox report stated that high prices and low demand have pushed car buyers into paying more and going to greater lengths to buy a used car. In fact, a recent survey found that Michigan residents would be willing to drive 380 miles to find a good deal on a used car.
As of May 2022, CoPilot’s analysis shows that average used car prices are 42.5 percent above their projected normal levels. CoPilot’s analysis also reveals which brands and vehicle types have the highest price premiums, and which are the furthest from returning to normal prices. Compared to pre-pandemic prices, used car buyers are paying 48 percent more. As a result, car owners are keeping their vehicles longer and lease holders are buying out their cars, which means dealerships are receiving trade-ins with more miles and service needs than usual.
Cox also reported that new car sales in May were moving at the slowest pace of the year with a year-over-year decline of 30 percent, with two fewer selling days compared to May 2021. By volume, May new car sales were down 11 percent from April.
Auto Industry Reports Takeaways for Car Dealers
- Check in with customers periodically to see if/when they are ready to turn in their vehicle, so you have an idea of when you may be getting some “new” inventory.
- With the slower pace of new car sales, it’s important for your dealership to be more intentional with how you market new car inventory to customers, such as seasonal promotions and specials.
- While the auto industry may be unpredictable right now, focus on what you can control, like tightening up your processes, customer service, and market knowledge.
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