It’s no secret that the used car market is absolutely bananas right now, with soaring demand and high prices that may be shocking to those buyers reentering the market for the first time in five years. Although used car prices are now starting to level out, they’re still elevated from last year. As a result, finding a good used car under $20,000 is still quite difficult, per a recent study.
According to Edmunds’ recent Q1 2023 Used Vehicle Report, which is based on data collected by Edmunds, the average used vehicle transaction price during Q1 of 2023 fell 6.4 percent year-over-year, dropping to $28,381 versus $30,329 during Q1 of 2022. Nevertheless, vehicle prices remain at historically high levels, with the Q1 2023 figure up 44 percent compared to the average used vehicle transaction price recorded for Q1 of 2018 ($19,657).
According to the data, 30.6 percent of used cars sold during Q1 of 2023 were priced under $20,000, a significant decline from 60.5 percent recorded five years ago. Edmunds also reports that less than 1 percent of new vehicles sold in Q1 of 2023 were priced under $20,000.
Used vehicle supplies have also declined significantly over the course of the last five years, with leased vehicle volume dropping to 559,000 vehicles from 1 million vehicles in Q1 of 2018. Trade-in volume was down to 5.5 million vehicles in 2022, as compared to 6.2 million vehicles in 2018, while off-rental vehicles are now older and more expensive, with the average off-rental vehicle age recorded at 3.0 years in March of 2023, as compared to 1.9 years in 2019, and average pricing set at $28,916, as compared to $15,829 in 2019.
Edmunds says that while average used vehicle prices have decreased slightly, shoppers are still facing significant challenges. However, due to a dramatic increase in used vehicle prices, those who have opted to keep their vehicle for the last five years have “virtually driven for free,” with the higher prices offsetting higher mileage.