Prices for used cars are finally dropping, just in time for consumers to take advantage of the Federal Reserve's latest interest rate cuts that affect car loans.
The drop in prices comes from a market oversight overview from Manheim by Cox Automotive that showed a price decline in December of last year for pre-owned vehicles.
The prices for wholesale used cars prices in the Manheim Used Vehicle Value Index (MUVVI) fell to 204.8, reflecting a decline.
While trucks saw the smallest annual price drop by 0.5%, luxury vehicles faced the steepest decline by 1.5%.
Electric vehicles (EV) outperformed, rising 3.4% from November but were down 7.6% year-over-year, reflecting a downturn in EV sales as consumers grow weary over high costs and charging needs.
Consumers buying used cars from a dealership remained flat month-to-month, but rose by 13% annually.
This discrepancy may be attributed to the average price gap between new and used cars being over $20,000 for the first time in history.
In Q3 of 2024, the average cost of a used vehicle was $27,177, with Edmunds reporting a price drop by 6.2% year-to-year.
The sales of new cars rose 8.4% from November 2024.
Analysts forecast potential tariffs from Donald Trump's administration to impact the sales of used cars in 2025.
A previous Edmunds survey showed that 73% of consumers have delayed buying a new car due to high prices, with 54% revealing that they are planning to work more hours or apply for an additional job so they can have enough money to afford a new or used car.
