US consumers considering selling or trading in their vehicle in the near future might want to pull the trigger now, according to Edmunds. As a follow-up to recent research released by Edmunds about used vehicle retail prices rising during the coronavirus pandemic, Edmunds analysts say that used vehicle trade-in values are also increasing dramatically.
Edmunds data reveals that the average value for all vehicles traded in during the month of July climbed to $14,066 compared to $12,083 in June, marking a 16.4% increase that is just shy of $2,000. Edmunds analysts note that limited new vehicle inventory and a surge in demand for used vehicles are driving values up: Edmunds data reveals that the average days to turn (DTT) for used vehicles dropped to 38.3 days in July compared to 44.1 days in June. This 13.1% decrease is the steepest month-over-month drop that Edmunds has on record.
"The used market is experiencing a dramatic recovery: Used vehicles were sitting almost untouched at the start of the pandemic, and now they're practically flying off dealer lots," said Jessica Caldwell, Edmunds' executive director of insights. "Dealers are willing to pay more to acquire inventory to meet the surge in demand for used cars, which is great news for car owners because it means they can expect to get a higher value for their vehicle if they sell or trade right now. But time is of the essence because there's no guarantee that these unique market conditions will continue for long."
Earlier this month Edmunds said that the average listing price for all used vehicles climbed to $21,558 in July, marking a $708 increase compared to June. Edmunds experts note that this is an unprecedented historical shift in the used vehicle market, where listing prices typically decrease during this time period due to depreciation.
"We're seeing evidence of more typical new-car shoppers gravitating toward the used car market than usual during the pandemic due to a combination of factors: Consumers are being more financially responsible, interest rates and CPO offers have been extremely favourable, and inventory has been severely limited on the new side," said Ivan Drury, Edmunds' senior manager of insights.
"Shoppers might be a bit surprised to find that prices are ratcheting up on used vehicles because of significantly increased demand."