Used car prices spike in March and August every year
According to Edmunds, 39-million used vehicles were sold in the United States in 2017. Of all the used-car dealers, CarMax ($NYSE:KMX) is the largest with over 700,000 used cars sold across its locations in 41 states and $17 billion in revenue.
Of course, people buy used cars year-round. But do used car prices fluctuate with any regularity? Turns out they do, and there's a pattern to be found: March and August of every year tend to see spikes in prices of used cars at CarMax according to data tracked at the reseller for the past three years (minus two months).
These spikes could have something to do with car supply or marketing efforts on the part of CarMax. It could also be influenced by the company looking to capitalize on post-tax season spending as rebate checks roll in to consumers, at least when it comes to the March spike.
Besides tax refunds, what else could influence the price of used cars throughout the year? For that, we turn back to our Economics 101 textbooks for a major clue: supply and demand.
As you can see, CarMax's inventory drops around March, which causes a minor scarcity of used cars and could lead to higher prices. Meanwhile, there are several points in the winter months where there are over 60,000 or 70,000 cars on the virtual lot and the average price cools off. As for the less extreme August price spikes, that could be explained by promotions looking to move inventory such as "Back-to-School" campaigns.
High-end and budget buys vs. the average
To test our theory about fluctuating prices during the year, let's take a look at two extremes in the automotive world: Porsche and Smart.
Tesla is still the most expensive car make on CarMax as we've reported, but used Teslas are still extremely rare. The next most expensive brand, Porsche, is a useful barometer for the average-price fluctuation (subscribers can get a further comparison to Porsche and Tesla inventory here).
On the eyeball test, the average price of a used Porsche seems to ebb and flow with the CarMax average, but still hovers between the $43,000 to $49,000 price range.
At the other end of the price spectrum is Smart, which has around the same amount of inventory as the German sportscar maker on CarMax (subscribers check in here). Here's what its day-to-day inventory price average looks like:
Similar to Porsche, there has not been a dramatic change here either, nor anything that's too far off from the average trends.
So regardless of the brand, or whatever may influence prices, the pattern is clear on when buying a used car could be a bit more expensive than the average. And if the trend continues, then we may be headed towards another spike right now.