Inventory Dynamics and Price Shifts in the Used Vehicle Market
The month of July 2023 saw significant trends that are shaping the automotive landscape. These insights not only impact independent dealers and consumers but also provide a broader view of the industry's trajectory.
Shifts in Prices and Inventory Dynamics
A standout takeaway from a recent CarGurus report is the rapid decline in used vehicle prices. July witnessed a 1.5% drop, bringing the average price to approximately $30.3k—a level reminiscent of figures from earlier this year. This correction was expected, prompting dealers to rethink their inventory strategies. The CarGurus Used Vehicle Availability Index mirrored this trend, a departure from its consistent second-quarter climb.
The question now is: How much further will prices slide? Although forecasts predict more declines in the remaining months, the speed of this adjustment remains uncertain.
Resilience in Used Retail Demand
July delivered a glimmer of optimism for the used retail market with a month-over-month rise in vehicle departures. Despite a minor year-over-year dip, this positive shift is noteworthy, especially in the context of subdued demand so far. While attributing this shift to price declines is premature, upcoming months will clarify this trend.
However, this increase arrives as the industry enters a seasonally quieter period. Dealers must now navigate the challenge of sustaining this momentum during the upcoming months.
Electric Vehicles Take Center Stage
An intriguing aspect of this month's report is the focus on Electric Vehicles (EVs). The EV landscape is evolving rapidly, generating both enthusiasm and uncertainty. Geographically, California stands out as an EV hub, while several states struggle with limited or no EV availability.
Price adjustments have impacted new and used EVs, making more dealership listings eligible for clean vehicle tax credits. This adjustment enhances the appeal of EVs in the market, potentially propelling their adoption.
Unveiling Additional Trends
Beyond the highlights, other noteworthy trends demand attention. The decline in inventory levels has led to a slight increase in average days-on-market, underscoring the influence of supply constraints. Moreover, new inventory levels dipped due to summer shutdowns, causing reduced vehicle production and constrained deliveries.
A particularly intriguing detail is the list of the top 10 vehicles experiencing the most significant year-over-year price declines—comprising exclusively of electric vehicles. This adaptation to market dynamics, combined with last year's high prices during fuel price surges, has reshaped supply and demand within the EV segment.