Used car prices see second-biggest monthly drop

PHOENIX - A new report released on July 10 reveals used cars had their second-biggest monthly drop in history.

It’s been a roller coaster of a car market since 2020.

At Yates Buick GMC, they say new cars are the reason used cars are falling in price.

During the COVID-19 pandemic, they couldn’t get inventory, so they had to buy up used cars at a premium to fill the lot. There was also a massive computer chip shortage that nearly halted SUVs and trucks from being made.

"We had to go far and wide to all these auctions, so I don’t want to say ‘chokehold,’ but a firm grip on the market," Pedro Tanori with Yates Buick GMC says.

The Mannheim index released a report that says used car prices dropped 4.3% in June, the second-largest one-month drop in history.

"Peaked about a year ago and we’ve absolutely seen a reversal," says Karl Brauer with ISeeCars.

He says prices are now finally leveling out on used cars after a substantial drop in the last few months.

"If you bought 6 or so months ago, your value would be down compared to what you paid. But now I think they’re stabilizing a little bit. Are they going to be down in the next 6 or 8 months? Probably but not by 8% or 10%," Brauer says.

This is a good sign for dealers and buyers.

"Even though it’s a little drop, and you see that, you see it’s a 4 percent drop, I think it’s a return to how things were prior to COVID. So I’m excited," Tanori said.

At Yates, they say since new cars are being purchased again, trade-ins are helping stabilize the market since they no longer have to pay wholesale premiums.

"Them going down a little is good for All consumers and definitely dealerships," Tanori said.

Brauer said if he were in the market for a used vehicle he said nows a good time to take advantage of the lower prices.

The biggest year-over-year price drops we’re for compact cars, closely followed by midsize and luxury cars.