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Don’t Expect Used Vehicle Values To Crater, J.D. Power Expert Warns


Although the prices of used vehicles have stopped rising, that does not mean that the market for them is on a cliff’s edge, waiting to fall. Continued supply line difficulties throttling the arrival of new vehicles mean that the market is unlikely to collapse.

That’s according to Tyson Jominy, vice president of data and analytics at J.D. Power, who spoke to Automotive News. He pointed to pent-up demand on the new side of the market, and said that will continue to make used vehicles rare in the years to come.

If automakers could produce vehicles like they did in 2018, before the COVID-19 pandemic, which prompted chipmakers to alter their priorities and other suppliers to shut down factories, the backlog of sales could be cleared “quite quickly” and the market would “be back to a more moderate price environment,” according to Jominy.

Read: The Used Car Market Is So Messed Up That Some 3-Year-Old Vehicles Actually Appreciated In Value

The analyst admitted that used vehicle prices have stopped rising like they were in 2021, when the average used vehicle went from costing $15,000 to $28,000. Since then, the price of wholesale used vehicles has fallen by about $3,000, but that hasn’t translated into much lower retail prices.

Jominy said that values for used vehicles will be stable, and pointed once again to the lack of new vehicles flowing back into the market. That, he argues, makes used vehicle prices even more durable than they were in 2021.

By 2025, it will be very difficult for consumers to find three-year-old vehicles that are coming off lease. That will mean that the discount associated with those vehicles will be canceled out by their rarity, keeping prices high.

“Those vehicles are basically gone, and the leased market really isn’t going to return until we start talking about these other factors, about the price environment moderating,” Jominy said.

Via Carscoops

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