Used car prices in the US fell 14% in 2022 and are expected to fall another 4% this year.
In the past two years, the COVID-19 pandemic and a global semiconductor shortage have caused used car prices in the US to skyrocket, making the used car market a "big party" for many businesses. But now, used car dealers in the US are in a difficult situation.
The golden age of the used car business during the pandemic is coming to a disastrous end, the New York Times said in an article published on January 31. The article cited Cox Automobile data saying that used car prices in the US fell 14% in 2022 and are expected to fall another 4% this year. This means many dealers will have to sell cars at lower prices than when they bought them.
Used car dealers in the US are in trouble again. Illustration photo.
Only about 36 million used cars are expected to be sold in the US in 2023, less than half the number of new cars expected to be sold that year. This situation is posing significant challenges for used car dealers in the US.
A typical example is Carvana - a startup specializing in buying and selling used cars online, which has been a model of success during the pandemic and is one of the youngest companies to enter the Fortune 500 in 2021. The Wall Street Journal said that last year, Carvana had to lay off 4,000 employees, equivalent to a fifth of its total workforce. Many groups of employees are now working less than 30 hours or 4 days a week.
The company is even quietly cutting more staff to save costs in the face of continued sales declines and debt of over $7 billion. Carvana shares have fallen 98% from their 2021 peak and bonds are difficult to trade.
According to the US press, the main reason for the above situation is that the global automobile manufacturing industry has improved and the American people's tendency to tighten their belts when inflation and especially interest rates for car loans are currently too high, over 12.3% compared to under 10% a year ago.
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