New vehicle prices have remained high, hovering around the $48,000 mark for months now. Meanwhile, used vehicle prices, which were once in the stratosphere, have continuously receded to about $34,000 and falling.
Are Used Cars a Better Deal Than New Cars?
The steadily falling price of the latter has caused Clark to adjust his position back to the status quo when it comes to used cars.
“There was a time during COVID when I said it’s better to buy a new car instead of used, but now I’m back to saying the traditional advice: Used instead of new,” he says.
The reasons why Clark has found it prudent to change his advice are because of a few factors at play in the vehicle market right now:
Factor #1: Market Conditions Continue To Improve
The pandemic-induced supply constraints like car rental companies selling their fleets, chip shortages and factory shutdowns have finally resolved. And that has relieved tremendous pressure on the U.S. car market.
Factor #2: Used Car Prices Are Falling at a Faster Pace
Another factor is that there are simply more used cars in the market that are getting cheaper than new models right now.
The Tesla Model 3, BMW i3 and Chevy Blazer are just a few of the used vehicles with double-digit price drops compared to last year.
“This is the leading edge of what’s happening in the used car market. And the prices have gotten better,” Clark says.
Factor #3: New Car Inventories Back To Normal
Clark says new car inventories are back to historical numbers, which is a theoretical 60-day supply on dealer lots.
“And this is the fault of the manufacturers,” Clark says. “They kept living under the reality of what happened in 2020 and 2021 and they kept loading up the most expensive versions of a car with the most options on a car, and they outpriced the market.”
Clark says as dealer lots continue to swell with new models, consumers are going to see car prices drop when it comes to new vehicles.
“We’ve got this big imbalance. And so there are going to be a number of new vehicles now being sold well below manufacturers’ suggested retail price. Big price cuts are required to move them,” he says.
Before You Buy a Used Car, Read This
Now Clark doesn't want you to rush out and purchase any used car. He wants you to do your due diligence to help your wallet. That means being intentional about auto financing (consider a credit union for low rates) and – if you're doing a trade-in – finding out what your car is worth beforehand.
Here are some Clark Smart steps to follow, if you’re considering buying a used car:
- Shop around by going on dealer lots as well as the best used car websites.
- Get a free VIN check to uncover any prior accidents, flood damage, etc.
- Hire a trustworthy mechanic for a pre-purchase inspection.
Final Thoughts
With the crazy car market getting less crazy, Clark says changing times call for a change in methods and strategies.
"What have I been saying over the last two years? If you've got one that's working, keep driving your current car. Now I'm moving away from that hard position and there may be an opportunity for you to get a decent deal today," Clark says.
Want to save money on a used car? Read our seven-step used car buying guide.
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