Used car prices defy forecasts: promised 35% drop missing

Used cars: the promised price drop is nowhere to be seen

The used car market should have crashed, but it is resisting. Forecasts circulating among buyers and enthusiasts point to price drops of 15-20% throughout the first quarter of 2024 and between 35% and 40% in the central semester, driven by a collapse in sales. The same prediction includes sporadic offers for new cars that would return prices to pre-pandemic levels and an uncomfortable warning: many small and medium-sized dealerships may close due to warranty liabilities. This sector also serves as a leading economic indicator.

The ads tell a different story. That gap is the entire issue.

A Peugeot 108 sold for the same price as five years ago

A Peugeot 108 bought in 2019 with one year of life and 15,000 kilometers for 7,500 euros. In January 2024, the same car, now with 70,000 kilometers, was sold for 7,500 euros. Five years of use and not a single euro of depreciation.

This is not an isolated case. A 2004 Seat Córdoba acquired in 2016 for 3,000 euros would be sold today, with more mileage, for the same figure or more. Anyone who trinc the market daily repeats the same observation: cars worth 1,000 euros three or four years ago are listed at 2,500. In a provincial dealership, 6,800 euros were asked for a 20-year-old unit with mediocre bodywork. The promised adjustment is not on the sign.

The picture changes somewhat for new cars, for a specific reason: the strong entry of Chinese brands. In any town, the most seen new model is now an MG.

Why are used car prices not falling?

Because good cars are scarce and bad ones are expensive. The market is full of scrap priced like jewels, while any decent unit sells quickly and expensively. Prices do not fall because there is no need to; there is a queue.

This is compounded by a regulatory effect. Low Emission Zones (ZBE) expel diesel cars registered before 2004 and petrol cars before 2000 from cities, crashing these cars in affected areas and keeping or raising them outside them. The geography of price has split in two: what is banned depreciates, what can continue circulating revalues. The result is a market that rises and falls simultaneously depending on the postal code.

Stock that does not move and engines with a bad fruta

At the other extreme, some watch units four and five years old that have been sitting in stock for months without the seller moving a cent. They are asked for practically what they cost new, many with engines from the Stellantis group well known for their breakdowns. The prediction is that this will burst sooner or later, but it has been doing so for a long time. Specific models have been stagnant since December, with luck seeing a slight drop.

250,000 diesels vs. 11,000 electric cars

The quarter’s numbers portray the Spanish buyer. In the first quarter, 11,000 electric cars were sold versus more than 250,000 used diesel cars. The old gas oil car remains the majority option, and hence the bulk of the used market does not behave like a liquidation good. No 35% correction fits in a market where nine out of ten operations remain used combustion engines.

Can you buy a luxury car for 10,000 euros?

Here the disagreement is total. One current holds that with 10,000 euros you can get an excellent, reliable car in good condition, and that the best opportunities lie in sedans and estate cars, not SUVs. The classic example: a Mercedes S-Class that cost 150,000 euros new and with 20 years can be bought for a fraction, with an interior and behavior that, it is said, do not envy anything current.

The objection is twofold. First, maintenance: some remember a 320 CDI sold for 1,000 euros with 650,000 kilometers. Second, and less obvious, the opportunity cost: finding that bargain requires time, training, and judgment, and that also costs money. The full breakdown of what it costs to save, between travel, mechanics, and hours invested, yields results that surprise both sides.

In between appears the anecdote that best explains why some do not drop down a tier: an S-Class involved in an accident climbing the Altube pass in January 2016 left its two occupants to walk away. The car was scrapped. The safety argument is hard to refute with a price list.

Ads with two photos and default distrust

The used market has a less friendly face: ads with two photos taken from the same angle, units at 2,000 euros when the rest of the same model and mileage range around 4,000-5,000, and sellers who do not answer basic questions. The trust mechanic, that professional who checks the car before buying, remains the real filter. In part of the market, the low price is the alarm signal, not the opportunity.

Used cars as an economic thermometer

Beyond the sector, the message is that used cars anticipate what is coming: if sales fall and credit becomes expensive, the correction arrives. On the other side, the response is always the same: so far, the announced correction has not appeared on any sign.

If the 35% crash comes, it will happen sooner in the car banned by the Low Emission Zone (ZBE) than in the twenty-year-old sedan well cared for. The reasonable doubt is whether the market will ultimately side with the published prices or the forecast some have been waiting for months.