Used car prices have reached record highs in recent months, but Cox Automotive says they are unlikely to come crashing down all at once.
In a blog post, Cox Automotive noted when prices begin to drop, demand picks up steam. As a result, values may dip slightly, but they won’t come crashing down.
Cox Automotive pointed out four instances when the market for used cars could have experienced significant declines, none of which exceeded a 13% drop:
- In late 2001 following the September 11 terrorist attacks, values slid 5.7% over a 2-month period but recovered within six months.
- An overabundance of cars coming off lease in late 2002 caused an 11.3% decline over eight months, and the market took nearly three years to recover.
- The global financial crisis of 2008 resulted in a 12.6% decline over the course of three months, but the market recovered within seven months.
- Finally, at the beginning of the COVID-19 pandemic in spring 2020, the market declined 10.1% in a month but recovered within three months and has shown few signs of letting up since.
Cox Automotive notes cars are almost always depreciating assets.
Wholesale used vehicle values are forecast to drop 3% by the end of 2022, which could finally signal a slowdown in the market. See used car models for sale