The used-car market is currently facing a significant challenge due to a shortage of low-mileage vehicles, leading to a decline in prices and an influx of high-mileage inventory. This shift in the automotive industry has been outlined in the July Industry Insights Report by Cars.com Inc., a technology company empowering the automotive industry. The report, crafted by Cars Commerce’s expert data analysts, analyzes supply, demand, pricing, and consumer behavior data from across the company’s platform, including Cars.com, Dealer Inspire, and Accu-Trade.
According to Rebecca Lindland, senior director of industry data and insights at Cars Commerce, new-car prices have remained steady at around $49,000 over the past year. However, there has been a significant increase in inventory levels, particularly in mid- to high-priced vehicles. The report highlights that there are currently only 333,000 new vehicles priced under $30,000 on the Cars Marketplace, compared to 1.1 million in July 2019. This shortage of affordable vehicles has led to a decline in prices, with used-car prices decreasing by 6% year over year.
In contrast to the new-car market, the used-car market is facing availability challenges, especially in sourcing low-mileage, lightly used vehicles. Prices for used vehicles under $30,000 have dropped by 3% year over year, with inventory in this segment increasing by 9%. However, the availability of vehicles priced between $30,000 and $49,000 has decreased by 15% year over year, reflecting the scarcity of 1-to-3-year-old vehicles typically found in this price range.
One of the most significant trends in the used-car market is the increase in the average odometer mileage of vehicles priced under $20,000. As of July 2024, these vehicles carry an average of 93,000 odometer miles, up 33% in the last five years. This rise in mileage indicates that many low-priced used vehicles may require significant service to remain roadworthy. The shortage of low-mileage, lightly used inventory is particularly noticeable in the higher-end used-vehicle market, with the average price for vehicles over $50,000 reaching $77,000.
To address these challenges, the automotive industry would need to add more than 750,000 sub-$30,000 vehicles to the market to bring prices back on track. The scarcity of low-mileage vehicles has led to an influx of high-mileage inventory, which may impact the overall quality and reliability of the used-car market.
In conclusion, the shortage of low-mileage vehicles in the used-car market is a significant issue that is leading to a decline in prices and an increase in high-mileage inventory. This trend highlights the challenges facing the automotive industry and the need for innovative solutions to address the imbalance in supply and demand.