CarGurus report shows used-car demand rising, retail prices falling
The latest research from CarGurus showed a “welcome sign” for the used-car market.
The automotive retail platform’s Intelligence Report for July found demand for used vehicles up by 4.8% month-over-month, according to the CarGurus Used Vehicle Demand Index, and just 0.5% behind the level of July 2022.
In his recap of the report, CarGurus director of industry analytics Kevin Roberts called that “a positive shift after an overall softer year for used retail demand,” though “the timing is unfortunate as we move into a seasonally softer time of year.”
Roberts said it’s too early to know if that increase in demand is tied to decreasing used-vehicle retail prices, a trend the report said accelerated in July.
The average listing price dropped by 1.5% for the month to slightly less than $30,300. That’s down 6.3% year-over-year — but still 46.3% above pre-COVID levels.
Used-car inventory levels fell for the first time this year, down 1% from June.
“The price drops seem to have given some pause to dealers acquiring fresh inventory, as the CarGurus Used Vehicle Availability Index declined after seeing nothing but increases in the second quarter,” Roberts said in the recap.
“The outlook for the rest of the year is one of additional pricing declines, but the uncertainty is mainly focused around how quickly prices will drop.”
The most dramatic price decreases have been in the used electric vehicle sector, as the 10 vehicle models showing the largest price drops year-over-year were all EVs. In fact, the top four were Teslas, led by the Model S, which was down more than 42% from July 2022.
In his recap, Roberts explained the decreases were the resulting of “adapting to recent market adjustments, as well as high prices last year when fuel prices surged, which impacted supply.”
New EVs also showed a dip in retail prices, though not as large as the used models.
Those declines, Roberts said, are helping dealerships by allowing more of their listings to qualify for clean vehicle tax credits, which are available for used EVs costing $25,000 or less. Currently, though, just 23% of used inventory qualifies, up three percentage points from June.
The report showed the majority of new EVs in inventory qualify for credits, which are available for new cars of $55,000 or less and new light trucks of $80,000 or less.
For the first time, the CarGurus report includes a section highlighting trends in the EV market, which shows that the availability of EVs is heavily concentrated in just one state.
According to CarGurus’ data, 26.3% of the nation’s new EV listings and 21.2% of the used listings are in California, far more than the states with the next most – Texas (7.0% new, 7.4% used) and Florida (6.5% new, 7.4% used).
More than half of the states (26) have fewer than 1% of the nation’s new EV inventory while 24 states are below 1% in used listings, a disparity that illustrates what Roberts termed the “mix of excitement and uncertainty” surrounding electric vehicles.
To read Robert’s recap and download the CarGurus Intelligence Report, click here.