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Used Car Prices to Fall 5-8% in 2026

  //automotive-transportation.news-articles.net/co .. 6/01/19/used-car-prices-to-fall-5-8-in-2026.html
  Published in Automotive and Transportation on Monday, January 19th 2026 at 1:14 GMT
      Locale: UNITED STATES

Monday, January 19th, 2026 - The used car market, which experienced unprecedented volatility in recent years, is poised for further price declines throughout 2026, according to a new forecast released today by Cox Automotive. The forecast signals a significant shift from the rapid price increases seen throughout the pandemic and its immediate aftermath, offering potential buyers a chance to secure vehicles at more reasonable costs.

The core prediction from Cox Automotive is a continued downward trend in used vehicle values, particularly during the first six months of the year. While stabilization is anticipated for the latter half of 2026, the company projects an overall price drop of 5% to 8% for the year. This would bring the average price of a used car to approximately $24,000 by the end of 2026.

Understanding the Factors Driving the Downturn

Several interconnected economic forces are fueling this market correction. The initial surge in used car prices, beginning in 2020, was directly linked to the disruption of new car production caused by the COVID-19 pandemic. Factory shutdowns and supply chain bottlenecks significantly limited the availability of new vehicles, creating a corresponding shortage in the used car market. Consumers, needing reliable transportation, were willing to pay premiums for the limited supply.

However, the landscape has dramatically changed. New car production has largely recovered, easing the supply constraints that previously drove up used car prices. This increased supply of new vehicles, in turn, is impacting the used market. Simultaneously, the economic uncertainty plaguing the global economy is impacting consumer behavior. Higher inflation, persistent supply chain issues (although lessened), and concerns about a potential recession have made consumers more cautious about spending, particularly on big-ticket items like automobiles.

"We're seeing more used vehicles on the market, and consumers are less willing to pay the high prices we've seen in recent years," explained Charlie Simpson, senior economist at Cox Automotive. Simpson's assessment underscores the dual impact of increased supply and dampened demand.

The Interest Rate Factor

A critical element contributing to the softening demand is the elevated level of interest rates. The Federal Reserve's actions to combat inflation have resulted in higher borrowing costs for consumers. This directly impacts the affordability of used car financing, making monthly payments more expensive and discouraging potential buyers.

Historically low interest rates during the pandemic encouraged vehicle purchases, further amplifying the price increases. The current higher rate environment reverses that dynamic, creating a significant headwind for the used car market.

What This Means for Buyers and Sellers

For prospective used car buyers, the forecast presents an opportunity. The anticipated price declines could translate to significant savings, especially for those who have been delaying purchases in anticipation of a market correction. However, buyers should still conduct thorough research, compare prices, and secure favorable financing terms.

Used car sellers, on the other hand, may need to adjust their expectations. The days of commanding premium prices for used vehicles appear to be waning. Listing prices should reflect the current market conditions and consider the potential for negotiation. It's also advisable for sellers to ensure vehicles are well-maintained and presentable to attract buyers in a more competitive environment.

Looking Ahead

While Cox Automotive's forecast points to a continued downward trend in the first half of 2026, the possibility of stabilization later in the year suggests a potential floor for used car prices. Several factors could influence this, including further improvements in new car production, shifts in consumer confidence, and changes in interest rate policy. The used car market remains sensitive to these economic indicators, and ongoing monitoring of these trends will be crucial for both buyers and sellers navigating this evolving landscape.