Conventional wisdom says that when a car buyer drives a new car off a dealer lot, it immediately loses a quarter of its value. There is some truth to that. Used car prices, even for those just a year old, drop sharply from the same models bought new. However, used car prices have risen in the past year. While there is no single reason for that, cars are built better than two decades ago, they last longer and bargain-hunting buyers can save money.
Another reason for high used car prices is supply. iSeeCars Executive Analyst Karl Brauer remarked: “The used car market is still seeing the effects of plant shutdowns during COVID-19, which has led to higher prices and shorter supplies of in-demand vehicles like pickup trucks.”
iSeeCars recently looked at asking prices for new and used cars sold between August 2020 and March 2021. The sample size for the study was 2.6 million vehicles. The used cars in the study were “lightly used,” which means they were a year old or less. The average drop in value from the new cars in the sample to the same model slightly used was 17%. Extraordinarily, one used car lost almost no value at all a year after it is bought new.
The Tesla Model 3 is the electric car company’s least expensive model and its best selling. It has a base price of $37,990, which can rise as high as $50,190 for one with four-wheel drive and larger battery features. Consumers cannot get one right away. The waiting list is several weeks, which is not typical of most cars sold in the United States. The price decline between a lightly used version of the car and a new one is only 2.1%, or $923. Brauer explained, “The Model 3 also commands a high used car price because it’s in relatively short supply in the used car marketplace.”
The swing in car-buying patterns is evident in other vehicles that hold their values well. Most at the top of the iSeeCars list are sport utility vehicles, crossovers and pickups. Americans favor these over sedans and coupes, which was not true a decade ago. After the Tesla Model 3, the vehicle that holds its value best is the Tacoma, Toyota’s full-size pickup. The falloff from the new price is 4.2%, or $1,557. It is followed on the list by the Kia Telluride, with a price decline of 5.7%, or $2,456. The Telluride is Kia’s largest SUV.
The 15 Used Cars That Hold Their Values Best
|Model||% Difference||$ Difference|
|Tesla Model 3||2.1%||$923|
|Toyota RAV4 Hybrid||7.8%||$2,808|
|GMC Sierra 1500||8.2%||$4,731|
|Honda Civic (Hatchback)||8.9%||$2,309|
|Chevrolet Silverado 1500||11.2%||$5,072|