Car buyers face a daunting market, even among falling prices for used vehicles

The gap between the average price of a new and used vehicle has eclipsed $20,000, according to data out from Edmunds. That’s the widest gap since the site started tracking it in 2004 and comes as used car prices are finally falling, though the market is still daunting.

Early in the pandemic, the shortage of new cars drove up demand and prices for used ones. Things are starting to normalize, according to Ivan Drury, director of insights at Edmunds.

“Because there’s finally those cars that are available on the new car market that’s putting that downward pressure on prices,” he said.

Though there’s still not that much downward pressure. Even after a 6% drop in the third quarter, according to Edmunds, the average price of a used car is still over $27,000.

“For anyone who has context, who has bought a vehicle at any point before COVID, this number seems unreal,” Drury said.

“Buyers are looking for inexpensive used vehicles and they’re just not out there,” said Sam Fiorani with AutoForecast Solutions.  

If you’re looking for a used car, say, under $20,000, “that vehicle is going to have high mileage and maybe not even the equipment or the size that you’re looking for,” he added.

That’s not what you want to hear if you’ve been on the sidelines of this market. 

Prices won’t move much, noted Fiorani — but falling interest rates could take the edge off buying a new or used car in the coming months.