If you have been in the market for a used car, waiting to pull the trigger appears to have paid off. Price tags on pre-owned vehicles are on the decline. Just ask CarMax.
Average used car prices dropped by nearly 9% in December, according to a CNN report. It comes after a two-year stretch in which used car price tags soared amid tight inventory caused by the pandemic and supply chain issues.
“Data from Edmunds shows the average price of a used car purchase in December at $29,533, down nearly $1,600 from the record high of $31,095 reached in April 2022,” Chris Isidore reports for CNN. “Today’s average used car price is about the same as the average new car price as recently as 2010.”
The good news for buyers is being less well received by used car dealers, like CarMax.
The massive used car dealer has seen profits decline by a whopping 86% as the booming resale market dries up, Reuters reports. Its sales reportedly dropped by 28% toward the end of last year compared to the same period a year earlier.
The sharp change has also taken a huge bite out of CarMax’s stock price. The company recently announced that it was slowing vehicle purchases, cutting spending and halting a planned stock buyback. It also pumped the brakes on hiring in its corporate office, according to Reuters.
Buyer Beware: Defective Used Cars for Sale
CarMax’s rollercoaster ride comes as the company recently agreed to resolve a long-running lawsuit over allegations that it was selling cars it knew were potentially unsafe for the road.
CarMax pledged to pay $1 million to settle the lawsuit brought by 36 states, accusing the company of failing to disclose open safety recalls on its vehicles. The company also said it will "clearly and conspicuously" disclose open recalls before presenting other paperwork.
Sadly, the problem goes beyond CarMax.
Approximately 40% of used cars being offered for sale across the country are covered by at least one open recall that has not been addressed, according to research from Consumers’ Checkbook and the Consumer Federation of America. Federal legislation that would require used car dealers to address open recalls before they can sell covered vehicles has stalled in Congress.
Know Your California Lemon Law Rights
The good news for California car owners and lessors is that you have some significant rights and protections under the state’s lemon law.
The California lemon law generally requires car manufacturers to perform a wide range of repairs on vehicles while they are under warranty. It also forces the companies to buy back (or replace, in some cases) cars that they cannot or will not fix. That includes covering the vehicle’s purchase price and financing costs, as well as rental car and other related expenses.
Talk with a California Lemon Law Attorney
If you have been stuck with a defective or malfunctioning vehicle, a California lemon law attorney at Bickel Sannipoli APC can help you fight back.