The Future of Used Car Values: A Glidepath or a Nosedive?

POSTED May 22, 2023

The collision repair industry, specifically the repair versus total loss decision thresholds, is heavily influenced by used car values. As we observe the pricing trends in the used car market, it’s crucial to examine what lies ahead for the industry in 2023. 

Average Wholesale Prices 

Average wholesale prices for used cars ended 2021 at around $26,600 and 2022 at approximately $24,700, according to J.D. Power & Associates. This gradual decline is expected to continue throughout 2023, indicating a glidepath rather than a nosedive. 

Factors Affecting the Used Vehicle Supply 

When analyzing the used car market, the volume of off-lease vehicles and overall new vehicle sales volumes from previous years are significant indicators. A reduced population of 0-5-year-old vehicles due to lower lease return rates and the impact of COVID and microchip shortages on new vehicle sales heavily influence used car values. 

The Impact of Online Retailers’ Demise 

The broader used car market may also be affected by the financial struggles of the two largest online retailers of used cars, Carvana and Vroom. With Carvana losing $1.6 billion in 2022 and Vroom posting a net loss of $451.9 million, the possibility of bankruptcy-driven dumping of vehicles by these retailers could momentarily accelerate the reduction in used vehicle values. 

New Vehicle Sales Forecast 

Changes in new vehicle sales significantly influence used vehicle values, as strong new car sales tend to lower the prices of used vehicles. The US light vehicle market is projected to grow by around 10% to 12% in 2023, with total sales exceeding 14.5 million vehicles. Although this increase in volume is promising, it remains lower than the 16 to 16.5 million pre-COVID sales volume. Consequently, better but not stellar sales will slow the glidepath of used vehicle values. 

Considering all leading indicators, we can expect that a sudden drop in used car values in 2023 is unlikely. The impact of used car values on collision repair will likely remain consistent with what we saw in 2022.

Register For Our Collision Repair in Focus Webinar

Don’t miss our Collision Repair in Focus Webinar hosted by Chief Innovation Officer Greg Horn with special guest and industry veteran Terry Fortner on June 15th at 9 am Pacific. We’ll discuss parts pricing, delivery trends, new and used vehicle sales, total losses, and the latest in vehicle technology. Gain insights into the challenges facing the collision repair industry in 2023 and get your questions answered live. 

Sign up now to reserve your spot! 

Greg Horn - AUTHOR
Greg is the Chief Innovation Officer at PartsTrader, overseeing our Product portfolio and leading data analytics. Formerly the Vice President at Mitchell International, he held senior positions in auto insurance claims at The Hartford, GMAC Insurance, National Grange Mutual, and Leader National Transport. Greg actively serves in industry organizations like the Collision Industry Foundation and has a passion for cars, having owned over 56. Greg holds degrees in Business Administration and German.