Summary:
- Used car prices dropped 6.2% year-over-year in Q3 2023, with EVs experiencing sharper declines, including Tesla Model S and Model 3 prices falling by 56% and 48%, respectively.
- New car sales hit a five-year high in 2024 as supply chains recovered, reducing demand for used vehicles. Rising interest rates also tempered buying activity.
- Pre-owned EVs offer some of the best value in the current market, with some models like the Tesla Model 3 and Model S experiencing price drops of around 50%.
- Sellers face a tougher market, especially in oversupplied segments like compact cars, while trucks and hybrids retain strong resale value.
- Used car prices are expected to stabilize as depreciation rates normalize, though potential trade tariffs could disrupt pricing trends.
The used car market has been highly volatile over the past few years. Its unstable behavior has been primarily driven by pandemic-driven supply chain issues, a shortage of new vehicles, and increased demand for personal transportation. But with new car production growing year-over-year and new vehicle sales rising to pre-pandemic levels, the auto industry is finding its footing once again, and used car prices are finally cooling. This was particularly true for electric cars, where 2024 steep declines in used EVs like the Tesla Model 3 and Model S. But what do these market changes mean for the average buyers and sellers and what can we expect in 2025 and beyond?
Used Car Prices Are Falling, but Not Equally Across the Board
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