Why are used cars priced like new cars?

The used car market has become increasingly unaffordable, with prices rising faster than headline inflation. This shift stems from a "price waterfall" where used vehicle costs track with expensive new car prices, compounded by ongoing supply chain constraints originating from pandemic-era production cuts. Furthermore, automakers have largely abandoned the entry-level sedan segment in favor of higher-margin SUVs, leaving consumers with fewer budget-friendly options. High interest rates on used car loans exacerbate the financial burden, often making new vehicles a more rational economic choice. While the broader market remains expensive, electric vehicles present a unique opportunity for buyers; misconceptions regarding battery longevity and reliability have suppressed their resale values, creating potential for significant discounts. Industry experts Ivan Drury and Jeremy Raab highlight these structural changes, noting that the traditional depreciation curve for vehicles has fundamentally altered.