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Used car prices set for drop off in a reprieve for buyers

New data shows auction prices peaking, which should lead to lower prices in the coming weeks.

Used car

It'll soon be a better time to check out a pre-owned car, according to new data.

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It's not a great time to buy a new car, even if that "new car" hails from a used car lot. Soaring demand and low inventory due to chip shortages pushed used car prices to near-new vehicle costs, but that gravy train for dealers may soon reach its stop. According to the latest data from Cox Automotive, which Bloomberg reported Thursday, wholesale auction prices reached a tipping point with a pricing peak likely in the rearview mirror now. In turn, used car prices for buyers should start to trend downward in the weeks to come.

Throughout June, according to the data, wholesale auctions where dealers purchase and sell vehicles in bulk trended downward. While wholesale values are still well above "normal" figures, they've experienced a 14% drop compared to the month of April. Then, wholesale values were 50% higher. In mid-June, they fell to 36%, according to the report. The decrease in value will likely lag a few weeks before buyers start to see the price decreases at dealership lots.

As for new car prices, there's no indication the chip shortage will let up just yet. Automakers continue to struggle filling dealers with new inventory as car buyers flock to put a new car in the driveway. The average transaction price for last month continued to hover around $38,000.