ATLANTA–Another national report is reinforcing other reporting done by CUToday.info showing the used car market is hitting the brakes pretty hard.
After the surge in used car prices resulting from the pandemic and other factors, prices are U-turning.
“After a huge run-up in 2021, last year was a reality check,” Chris Frey, senior manager of economic and industry insights at Cox Automotive, told the New York Times. “The used market now faces a challenging year as demand weakens.”
According to Cox, used-car values fell 14% in 2022 and are expected to fall more than 4% this year. “That shift means many dealers may have no choice but to sell some vehicles for less than they paid,” the report said.
Two Examples Cited
Another example cited: the online used car retailer Carvana, which recently reported a quarterly loss of more than $500 million, and which has laid off 4,000 employees.
CarMax, another used-car giant, is also hurting, noted the Times, although it is on “much steadier ground.” In the three months that ended in November, its vehicle sales fell 21% to 180,000, and net income tumbled 86%, to $37.6 million, the report added.
CarMax is trying to avoid deep price cuts to ensure it makes money on each sale even if its overall sales fall, CEO Bill Nash told the Times. In its most recent quarter, CarMax bought 238,000 cars from individuals and dealers, about 40% fewer than it did a year earlier.
Forecast for 2023
Cox Automotive expects about 36 million used vehicles will be sold in the United States this year. Fewer than half as many new cars and trucks are expected to be sold in 2023, the Times reported.
The data further show rising rates are having their effect. In December, the average interest rate on used-car loans was 12.37%, up from less than 10% a year before, according to Cox Automotive cited by the Times.
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