Used Supply Stabilizing

Used inventory levels have been stabilizing after experiencing a drop in late model year supply, which impacted overall totals. We’re still seeing significant drops in 2020 and 2021 model year listings; however, an influx of 2022 and 2024 models has helped to offset the overall declines.

The CarGurus Used Vehicle Availability Index increased 2.3% month-over-month (MoM) in October; however, levels are still down 2% year-over-year (YoY). This shift in supply, along with stronger-than-anticipated second-half used vehicle demand, helped to stabilize used prices in Q3. However, prices started to decline again in October, with MoM prices down 0.9% and now down over 5% YoY. We’ll be monitoring used inventory levels closely in the coming months as the late model year shortage is just starting to impact the market.

A Look at Certified Pre-Owned

For this month’s report, we included a snapshot on Certified Pre-Owned (CPO) vehicles as the segment has been on the rise as a potential solution for consumers who want the assurances of a new vehicle, but are put off by their still-high prices. In a positive development for consumers, the supply of CPO vehicles is on the rise, up over 8% YoY at the end of October. Another consumer benefit is CPO pricing, which has been moderating, down 0.4% YoY.

However, these gains come at a cost, as we’ve seen the average age and mileage of CPO vehicles increase as automakers look to offset a drop in late model vehicles. The average age of CPO vehicles has increased by nearly 1.5 years from January 2020 to October 2024 to 4.5 years as the pool of vehicles that qualify for certified status continues to expand. On a positive note, we haven't seen the average mileage of CPO vehicles increase as significantly; the average mileage is up 2.4k miles to nearly 30k miles overall over the same time period.

Hybrid Prices on the Move

As we approach the end of the year, the average list price of both new and used hybrids has been on the move, and in different directions. For new vehicles, the price of hybrids and internal combustion engine (ICE) vehicles converged, with hybrid prices moving below ICE by $88 at the end of October. Compared to the same time in 2023, the spread between the two was over $4k! This shift in hybrid prices is helping to power the increase in hybrid sales that we reported on in our Q3 report.

Interestingly, the increased interest in new hybrids is having the opposite effect on used vehicles, as the average price of used hybrids is heading higher. The price spread between hybrids and ICE vehicles increased to over $7k at the end of October; at this time last year, the spread was just $4.3k. In fact, the pricing for hybrids is now closer to that of battery electric vehicles (BEVs), as increased demand with limited supply is driving prices higher.