San Antonio, Texas, like the rest of the country, is experiencing a unique and dynamic used car market due to the ongoing impact of Covid-19. Despite the challenges posed by the pandemic, the used car market in San Antonio is proving to be resilient, with prices remaining historically high and continuing to be supported by the pandemic.

According to Manheim, a leading provider of used car data information, the used vehicle value index reading for January came in at 224.8, up 2.5% from December’s 219.3 reading. This marks the second consecutive monthly increase in used car prices. The rise in used car prices can be attributed to increased demand, with used vehicle sales in January rising 16% compared to December.

The pandemic has played a role in supporting used car prices, as well. The sweet spot for pre-owned cars is usually around three years old, when they have depreciated by around 40% and still have some warranty coverage. However, in 2020, new car sales dropped by 15% to 14.5 million units, leading to a shortage of three-year-old inventory. This reduction in supply has impacted the availability of high-quality used vehicles, particularly off-lease vehicles from Ford and General Motors, which are down 10% to 15% compared to 2020 levels.

Despite the increase in used car prices, it is not all bad news for investors. Stable used car prices are good for dealerships, as they do not want to see their inventory decline in value after just a month. Moreover, most analysts predict that new car prices will fall in 2023 compared to 2022, and continued higher used car values will alleviate some pressure to reduce new car prices.

However, consumers in San Antonio may not be so lucky. The prospect of elevated used car prices is coupled with record-high interest rates on used car loans. The average rate for a new car loan in January was 10.57%, up from 9% just a few months ago. This increase of 1.57 percentage points can add a few hundred dollars to a used car buyer’s annual bill.

In conclusion, the used car market in San Antonio, Texas, is experiencing a unique and dynamic time, with prices remaining high and supported by the pandemic. While this may not be great news for consumers, it is positive for dealerships and investors, who can expect stable used car prices and reduced pressure to reduce new car prices. With the used car market in a state of flux, it is important for buyers to be informed and vigilant, so they can make the best decision for their needs and budget.

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