We read multiple used car market predictions for 2023, so you wouldn’t have to. You might have heard how used car prices or car prices overall are skyrocketing. But what goes up, must come down. We explain to you how exactly the prices went that high and if and how much they’re about to decrease in 2023.
Used Car Market Statistics
Before diving into details, let’s have a look at the bigger picture. Straits Research predicted the used car market size to be 2.75 trillion USD by 2030. In addition to that, they had some interesting findings regarding the used car market:
- Based on vehicle type, the global used car market is bifurcated into hatchbacks, sedans, and SUVs. The SUV segment is the highest contributor to the market and is expected to grow at a CAGR of 7.8% during the forecast period.
- Based on fuel type, the global used car market is bifurcated into petrol, diesel, and others. The petrol segment owns the highest market share and is expected to grow at a CAGR of 7.9% during the forecast period.
- Based on distribution channels, the global used car market is bifurcated into franchised dealers, independent dealers, and others (private sales, offline, online). The franchised dealer segment is the highest contributor to the market and is expected to grow at a CAGR of 8.9% during the forecast period.
- Asia-Pacific is the largest global used car market shareholder and is expected to grow at a CAGR of 9.3% during the forecast period, while Europe is expected to grow at a CAGR of 10.2%.
Used Car Prices
Owning a car is not a cheap hobby these days. Rising gasoline prices and interest rates are making car ownership quite an expense. Car prices are increasing due to various global supply chain issues, including a shortage of chips and increased costs for raw materials. The scarcity of new cars has also led to an increase in demand for used cars, which has caused the prices of used cars to rise as well.
Used car market is currently cooling and prices are starting to drop. J.P. Morgan Research predicts that in 2023, used car prices are expected to drop by 10% to 20%. Production of new cars will increase, meaning the demand for used cars will moderate.
Outlook for 2023
According to Forbes, while used car prices may decrease in the near future, the increased cost of loans and leases due to rising interest rates may make it more cost-effective to purchase a new car rather than a 2- to 3-year-old used car due to the lower interest rates for new cars. In their article “Car Market Outlook: What To Expect In 2023” they add: “After reaching absurd highs in early 2022, used vehicle prices have already fallen. They’ll continue to ease in 2023, just not by as much as consumers would hope. Also, cars over 4 years old will ease more than those that are 1 to 3 years old.”
Although supply chain issues may improve and used car prices may drop, the uncertainty of consumers will most likely grow. Inflation won’t go anywhere and interest rates are rising rapidly, which is causing financing to become more expensive for consumers. That’s why consumers tend to postpone their purchases and use the cars at hand longer.
If you’re looking to buy a used car though, check out our checklist about what to pay attention to.
https://drivex.io/streamlining-car-inspection-in-insurance/
