Depending on where you look, it seems the car market is returning to a “normal” state. Deals on electric cars are becoming common again, and used luxury cars are getting hit with the typical levels of depreciation. On the other hand, buyers in the less expensive side of the market are having a harder and harder time finding good deals.
Not long ago, there was a time where shoppers with a $20,000 budget could pick up a nice Mazda6 or Toyota RAV4 that was only a few years old with decent mileage and likely some warranty coverage left. Even in the $10,000-15,000 range there were good deals on low-mileage cars to be had. For instance, in 2020, I personally bought a well-kept 2017 Volkswagen Alltrack for around $17,000.
iSeeCars recently released a study in which they analyzed over 10.8 million used car sales from 2019 and 2023, comparing list prices, average odometer readings, and compiling some staggering (though not terribly surprising) statistics from the differences.
Four years ago, sub-$20,000 cars made up almost 50 percent of the used car market; today, the “affordable” rides have less than 13 percent of the market share. What’s more, the cars in this price bucket now have on average over 60 percent more miles on the clock. I can attest to this as well; my younger brother’s first car purchase in 2022 was a 2016 VW Jetta with 110,000 miles — and finding something like that close to $10,000 was a major struggle.
“Among the pandemic’s many casualties is the affordable used car, which has nearly vanished from the used car marketplace,” said iSeeCars’ Executive Analyst Karl Brauer. “In 2019, used car shoppers with a budget of $15,000 could afford over 20 percent of the late-model used car market. Today that budget only gets them access to 1.6 percent of the market.”
“During the pandemic lockdowns one of the few things people could still do was take a drive, and clearly many of them did,” Brauer added. “This drove up the mileage across the used car market, but the supply of new and used cars was so constricted that the additional mileage didn’t hurt used car prices – they still went up.”
Below is iSeeCars’ full price category breakdown of market share and mileage changes.
A look at some of the most popular models further puts the price changes into perspective. Used Toyota Camrys and Honda Civics are both on average over $8,000 more expensive than they were four years ago. Or, put another way, they’re 46 to 50 percent more expensive.
“Two popular compact SUVs, the Honda CR-V and Toyota RAV4, increased in price 37.1 percent and 41 percent, respectively, over the last 4 years,” said Brauer. “These price increases occurred despite a doubling of the average mileage on these same used models, from less than 50,000 miles in 2019 to over 100,000 miles in 2023.”
Every car on the list below is priced between 25 percent and 57 percent higher today versus 2019.
What does all this mean? Quite simply, the massive price increases combined with higher interest rates make it significantly more difficult for a large portion of the population to find affordable, quality used cars. While there are still “deals” to be had, the numbers involved with those deals are greater all around.
Brauer concludes, “Used car shoppers have to face the stark reality of paying more for cars with higher mileage compared to the pre-pandemic used market. It’s news nobody wants to hear, but the numbers don’t lie. This means due diligence in knowing a used car’s market value and confirming its service history is more important than ever.”
That’s right, doing your homework, getting a pre-purchase inspection, and shopping your loans around are more important than ever. For the first time, GAP insurance and extended warranty packages may even be a worthwhile consideration.
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