Originally Posted On: https://www.credello.com/

Used car prices have experienced their biggest drop ever as new luxury car sales are booming. During this shift away from used cars, there are several steps you can take to increase your chances of getting approved for car loans, like checking your credit score, comparing different car loan options, getting pre-approved, providing a substantial down payment, having a co-signer,  and being prepared to pay higher interest rates.

While used sales are down, the highest end of the luxury car market is seeing unprecedented increases in sales. These trends may not last forever, but they are certainly fascinating.

What’s happening with used cars?

The average used car price has dropped by around 12% over the past year, while new luxury car sales have increased by nearly 20%. Several factors, including solid economic recovery, low interest rates, and the shift toward online car buying, drive this trend.

One of the main reasons for the drop in used car prices is the increase in supply. With more and more people opting to buy new luxury cars, more used cars are on the market, which puts downward pressure on prices. Additionally, the shift towards online car buying has made it easier for consumers to find and compare used car prices, contributing to the decline in prices.

However, it’s important to note that not all used car prices are declining. Prices for high-end luxury cars and vehicles with low mileage are still steady or even increasing. The drop in used car prices may not last forever as the supply of used vehicles on the market eventually decreases.

Luxury sales boom

On the other hand, the luxury car market is performing exceptionally well, with BMW retaining the top brand in the global premium market. Despite both BMW and Mercedes-Benz experiencing a decrease in sales due to disruptions caused by shutdowns and the conflict in Ukraine, both brands saw significant sales growth in the fourth quarter, indicating a return to normalcy and a positive outlook for future growth.

Lamborghini reported record sales in 2022, with 9,233 cars sold, a 10% increase from the previous year. The biggest gains in sales growth were seen in Asia and the Americas. The success was driven by the high demand for the brand’s Urus “super SUV” model, with over 5,300 deliveries globally. The CEO of Lamborghini said that the company needs to manage its future order intake to maintain a controlled level of growth and exclusivity. Additionally, in the U.K., Bentley also delivered a record 15,174 vehicles, a 4% increase from 2021.

Rolls-Royce Motorcars also reported a record year in 2022, reaching the milestone of delivering over 6,000 vehicles. The CEO of Rolls-Royce Motorcars said that the cost of the car is even more important than volume, with an average of half a million dollars per vehicle sold. He added that it’s quite an achievement, as ten years ago, it was just $250,000.

Wall Street is also getting interested in the high-end luxury trade, with Bank of America adding Ferrari to its best auto ideas list in 2023, citing factors like modest volume expansion, an upward bias on pricing, licensing opportunities, and a commitment to preserving the “exclusive luxury culture” as “upside risks” for the stock going forward.

Bottom Line

Overall, the used car market is experiencing a significant shift, with prices dropping as new luxury car sales boom. While this trend may not last forever, it presents an opportunity for consumers looking to buy a used car to get a good deal in the short term.