Late April and early May—when more than a month of coronavirus-related shutdowns had ground auto sales to a halt nationwide—was a decent time to buy a used car for those who were in a position to do so. But the landscape has changed since then and, as consumers have shifted toward used cars amid a struggling economy, demand is booming.
“We saw wholesale prices dip, but since consumer demand stayed strong, wholesale prices are back up,” says Eric Lyman, chief industry analyst for ALG, a subsidiary of TrueCar. “There are not as many deals to be had as a result.”
Wholesale used car prices had fallen more than 11 percent between mid-March and the end of April, and nearly 10 percent since April 2019, according to the Manheim Used Vehicle Value Index. But the retail discounts that were prophesied never materialized.
“You often see consumers gravitate toward used cars during a recession,” says Jeremy Anspach, CEO of Purecars, a consulting firm that helps dealers maximize market impact. “People want more vehicle for less money, so there’s no fire sale in pre-owned vehicles since demand is very high.”
Lyman points out that the coronavirus remains a question mark that could still impact sales, pricing, and incentives if a surge in infections forces any more shutdowns.
“We expect incentive fluctuations to continue through the rest of the year due to COVID-19 and the changing economic outlooks that will impact supply and demand,” he says. MORE ON CAR BUYINGUsed Cars That Give the Most for Your MoneyThe Most Discounted New Cars Right NowHow to Buy a Car From Home and Spend Less Time at the DealershipCR’s Trade-In Value EstimatorCR’s Used Car Marketplace
In good times and bad, Consumer Reports members can search our Used Car Marketplace for vehicles for sale in their area, sorting by the factors that matter most.
The listings include CR reliability and owner satisfaction ratings, and most vehicles include a free Carfax report. Members can also access ratings and information on used vehicles going as far back as 20 years. CR anonymously buys about 50 cars a year for the auto testing program.
With travel at a near standstill during the shutdown, rental car companies unloaded vehicles from their fleets, adding to the used-car surplus while demand was low. Further compounding the oversupply of used cars only a few months ago was the accumulation of off-lease vehicles, CR found. Despite lease extension offers, many customers had opted to turn in their vehicles on time, adding to the surplus of newer used cars.
Anspach says that although forecasters had predicted falling used car prices this summer as rental car fleet reductions and lease returns flooded the market, an alternate reality took shape.
“What we’re seeing right now is that demand is so high, there isn’t excess inventory of pre-owned cars,” he says.
CR experts say that manufacturer incentives on new cars are expected to last for months, although the size of those discounts could change, too. Bottom line: Buy when the time is right for you. If it’s right now, you can save a bundle on a new car. The used car market has slowed down for the time being. Either way, do your research on current pricing and deals, and be open to considering several models to increase your chance of scoring significant savings.