BEWARE: Used Car Prices are Correcting | Dealers Need To Cut Losses

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Used car prices are finally correcting and this means that many dealers need to take their loss. What does this mean for 2023?

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Used car prices are finally coming now, they are correcting. This is good news if you are planning to buy an used car. Starting with the wholesale prices, we can see that they are down by 7 to 14%, depending on the trend you look at. However, retail prices decreased a lot less. This is partially caused by the larger volatility in the wholesale prices but also by the inventory management of car dealers; old inventory is still priced according the wholesale prices of a few months ago. I.e. It is too expensive. Dealers typically use a cost based pricing approach, meaning that they take the acquisition costs and add a certain margin to arrive at the asking price. When prices are falling, this can be problematic. Consequently, the numbers show that the old-more expensive-inventory is not selling. It therefore looks like dealers need to take their loss sooner or later.

Looking at the demand and supply, we can see that both are still below 2019 level. However, they are in balance. Days supply was even above 2019 levels at the beginning of the year. As we discussed during the previous market update, this was a sign that the market was topping.
So what does this mean for future prices? Will used car prices come down even more? At the beginning of the year I shared with you two deviating forecasts. Based on the current developments it seems likely that the prices end up somewhere in the middle.

00:00 Beware if you are buying or selling a car
00:28 Wholesale prices
02:32 Surfshark VPN
03:51 Retail prices
05:27 Segments with the highest depreciation
07:12 Demand and supply
09:04 Price forecast

Disclaimer: The Content is for educational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this video constitutes a solicitation, recommendation, or endorsement to buy or sell any cars. The information published has been obtained from or is based on sources which are believed to be accurate and complete. Although reasonable care has been taken, the completeness and the accuracy of any information published cannot be guaranteed. Any opinions may be wrong and may change at any time. You should always carry out your own independent verification of facts and data before making any purchase decision.