Used-Car Prices Are Falling, Especially Among EVs

In good times and bad, Consumer Reports members can search our Used Car Marketplace for vehicles for sale in their area, sorting by the factors that matter most. The listings include CR reliability and owner satisfaction ratings, and there’s a free Carfax report for most of the vehicles. Members can also access ratings and information on used vehicles going as far back as 20 years.

Our main advice for buyers in today’s market is to act quickly and negotiate from an informed perspective. That can make the difference between getting a fair deal and paying too much. Also, it has never been more important to make sure your credit is in good shape. Interest rates are up, but the most competitive rates are reserved for those with strong credit ratings.

Here are some other ways to make the best of the current used-car market.

Consider buying a new car. The average price of a new car is about $47,000—showing a decrease this past year and down from its peak in December 2022. According to a recent report from CarGurus, an online marketplace for new and used cars, lower prices, combined with slowing sales and building inventory, mean that dealers and manufacturers are more likely to offer incentives on new cars in the months ahead. That means further price breaks for consumers. Also, new car buyers with good credit can benefit from the manufacturer-subsidized financing offered on some brand-new models.

If you have to borrow money to buy a car, keep in mind that the older the car, the more interest a lender will charge. And with new cars, there’s also the added benefit of a fresh factory warranty. Check dealer incentives in your area and see what’s being offered. Pat Ryan, CEO of CoPilot, says that some of the best used-car deals right now can be found among Chryslers and Kias.

Look at older models. Used-car prices have dropped 10 percent on average over the last year, but pricing on older cars has seen a sharper decline. Ryan says that prices on 4- to 7-year-old used cars are down 19 percent, and 8- to 13-year-old cars are down 18 percent.

However, if you decide to buy an older car, Consumer Reports recommends looking at models known for reliability. Vehicles more than 5 or 6 years old aren’t likely to still be covered by a factory warranty (although many EVs have 10-year warranties). You can purchase an extended warranty or service plan, but it’s usually better to save what you’d spend on those for future repairs. The downside is that if you have to finance the purchase, interest rates tend to be higher on loans for older cars.

Shop used EVs. Ryan says automakers built more EVs than consumers ended up wanting over the past few years, which has caused used EV prices to drop 17 percent over the last year (and 36 percent over the past two). The best deals, though, may be found among used Teslas, which are selling for 36 percent less than they were a year ago. Ryan says used Model S prices have fallen 56 percent to an average of $32,582, and used Model 3 prices have come down 48 percent to an average of $26,785.

“Consumers realize that used cars are not the great deal they once were, particularly as higher interest rates can actually make them more expensive for those who have to finance them,” says Jake Fisher, senior director of CR’s Auto Test Center.

Used-car wholesale prices—the price a dealer pays—fell during much of 2023, but trended up again in August. But those decreases have been slower to materialize for consumers on used-car retail lots. The long and the short of it, says Alain Nana-Sinkam, founder of Remarkit, a firm that tracks automotive market trends, is that the prices you’re seeing used-car dealers charge now are based on the wholesale prices they paid for them, often a month or more before they appeared on the lot, when prices were higher. He also says that any price declines have been at the top end of the market—in the luxury segments—and that with budget cars still very much in demand, prices haven’t cooled down for buyers looking for deals on those models cars.

Pat Ryan at CoPilot says that because of higher interest rates, used cars are no more affordable now than they were at the peak of the price hikes. He adds that manufacturers’ focus on more expensive new models over the past year has further exacerbated used-car pricing.

"With used-car prices finally easing this summer, many consumers may be asking themselves, ‘Should I buy the dip?’” he says. “The short answer is no. So far, prices have only fallen to the levels they saw at the start of the year, but have yet to make up the very substantial gains they saw across the past three years of the pandemic.”

In other words, Ryan says, prices still have a long way to go before approaching “normal” levels again.