New vs. Used-Car Value Statistics

New Car Values

According to CoPilot’s Car Price Index Report, the average cost of a new car as of July 2024 was $49,673. This number has remained relatively stable since earlier this year. However, it remains 30 percent higher than in March 2020, the last data point pre-COVID.

Data from the Bureau of Labor Statistics shows that the Consumer Price Index (CPI) — which measures inflation — for new vehicles in U.S. cities experienced a 0.3 percent decrease from 2023 to 2024. While this is a very slight decrease, it’s the first indication of a drop in prices since they skyrocketed in 2020 and 2021. See below for weighted representations of price changes. The higher the number, the more the price changed, on a scale of 140 to 180¹.

Used-Car Values

As of July 2024, average used-car prices are still about 33 percent higher than pre-pandemic costs. Costs are likely to remain high for used cars in particular as a result of new car shortages over the past several years.

The highest jump in price was from 2020 to 2021, which saw a 27 percent increase in the CPI for used cars. As new car prices go up, more people want to buy used cars, leading to an increased demand and, thus, higher prices for used cars as well.

Why Are Car Prices So High?

There are a few reasons why car prices are still high:

• Inventory shortage: As we explore more below, fewer cars available means higher prices. A lack of semiconductors, issues with supply chains, and a labor shortage in the U.S. contributed to a new car shortage, which is alleviating but will affect the availability of used cars over the next few years.
• Lack of incentives: When manufacturers produce too many cars, they offer incentives in the form of discounted vehicle prices to help move inventory. In contrast, when there’s a lack of inventory and high demand, manufacturers don’t have much reason to lower prices or offer discounts. The average discount in the fall of 2020 was around 20 percent, but the average incentive as of June 2024 was only 6.4 percent.²
• High interest rates: While interest rates don’t affect the sticker price of a car, they affect how much you’ll pay for a new or used vehicle if you finance it. Interest rates have risen significantly over the past few years, leading to higher average monthly payments and making it more expensive to finance a car.

When Will Car Prices Drop?

While new-car prices are starting to come down from their peak, industry experts are expecting that used-car inventory will remain low for the next few years, meaning that you can continue to expect high prices. Keep in mind that while some costs are decreasing, they still remain far above 2019 prices, and they are unlikely to fall to that level again due to inflation.

Car Sales

How many cars are sold in the U.S. per year, and how does the number relate to inflation?

Sales Per Year

The number of new cars sold in the U.S. remained relatively stable between July 2023 and July 2024, decreasing by only 0.85 percent. Car sales declined sharply in 2020 but have since stabilized  as supply chains have begun to return to normal³.

Inventory Per Year

Domestic auto inventory hit an all-time low in November of 2021, with only 80,983 units in the U.S. There has been an upward trend since July 2022, though inventories remain far below pre-pandemic levels.⁴

Inflation vs. Car Sales

For most of the past decade, inflation and car sales have remained relatively stable, with only minor fluctuations. In 2020, both inflation and sales decreased, the latter due to a lack of inventory. Inflation has been decreasing since its peak in 2022, and vehicle sales rose in 2023, indicating that more people are buying cars now that prices have come down somewhat⁵.

Most of us can’t afford to buy cars out of pocket, which is why many people rely on car loans. The APR, or annual percentage rate, is one of the most important factors when choosing an auto loan for a new car. Higher interest rates are the norm nowadays, with a 26 percent increase from the third to the fourth quarter of 2022 and an increase every quarter since then⁷.

In May 2024, car loan rates reached a record high of 8.65 percent.

Insurance providers use a number of factors to determine car insurance rates, and one is the value of the car itself. More expensive cars tend to cost more to insure, as they have higher repair and parts costs. However, insurance providers also consider vehicle safety ratings, i.e., how susceptible the car is to theft, occupant injury, and damages, along with how well it protects drivers and passengers in car crashes.

Whether you’re buying a new car or a used car, it’s important to know what you can expect to pay. But if you want to spend less, you may be better off buying a new car in the near future. You may also want to stick with your current car, if it’s usable, and wait to upgrade or rely on rideshares or public transit. If you wait a little bit until inventories increase even more, you could save thousands on the sticker price and potentially find lower auto loan rates for new cars.

We analyzed data from the following third parties:

• Bureau of Economic Analysis
• Bureau of Labor Statistics
• Federal Reserve Bank of St. Louis
• Kelley Blue book
• Statista