The average new car price in America has been dropping for months as dealers have a larger-than-planned supply of new cars to sell.
The price of the average used car has also been on the way down, but inventories are going in the opposite direction.
Car dealers traditionally aim to keep about a 60-day supply of cars in stock. Veteran salespeople say that’s where they likely have easy access to a selection to satisfy most shoppers.
According to data from Kelley Blue Book parent company Cox Automotive, the average dealer entered March with about 53 days’ worth of used cars in stock. They ended it with 44.
“As we move into spring, sales for used vehicles typically rise, and we saw that trend continue this year with strong demand,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “Sales for used vehicles picked up in February, continuing to increase for eight weeks in a row before peaking towards the latter half of March.”
Spring usually means a used car sale surge, as millions of Americans use their tax returns to help fund purchases.
“Affordability matters more than ever to consumers, and declines in used-vehicle prices help offset higher interest rates,” Robb says. ”Once tax return season got underway, many consumers had more income to use as a down payment, driving customers into retail dealerships.”
Limited supply may not mean a sharp price increase this year.
Car dealers know the spring surge will arrive and plan accordingly. The wholesale prices dealers pay at auction for the used cars they later sell have been falling in recent weeks – a sign that dealers won’t need to raise prices because of an expected uptick in sales.
