The Dynamics of Chattanooga’s Used Car Market

CHATTANOOGA, Tenn. (WDEF) – A national survey says that used car prices in Chattanooga have significantly dropped over the past year.

However local lenders and car dealers aren’t sharing the same view on the ground.

Since the pandemic slowed down supply chains, car manufacturers have struggled to meet demand.

This led to a spike in prices over the past three years, especially for used cars.

However, a new survey from the national auto search engine iseecars suggests that used car prices have fallen by 11.2% in the Chattanooga area over the past year, or average of $3,600 less.

Karl Brauer, the executive analyst for iseecars, said, “It’s more of a buyer’s market today than it was 6 or 12 months ago, it’s still not as good as it was 24 months ago. We’re just going to have to see how it plays out over the next six or 12 months whether it’s economic concerns, inflation, interest rates, recessionary concerns that kind of pull back demand, and what’s left are the people who are ready to buy cars are able to get them at a much lower price.”

Some analysts share a different view of the market.

The used car lot at Lexus of Chattanooga. They say the amount of inventory is below average.

Eric Weekly, the Vice President for Consumer and Mortage Lending for the Tennessee Valley Federal Credit Union, said, “Last year we saw a little bit of a dip, but that did not hurt our demand. The recent reports I’ve read for January and February are that used car prices are up 3% and 4 percent, which are kind of in line with last year.”

Some car dealerships are not seeing the dip in used car prices as their inventory is not at a normal level.

Allie McKamey Baker of Lexus of Chattanooga said, “It’s likely correlated with the fact we are not receiving new vehicles to the degree that we anticipated.”

The pre-owned lot at Lexus of Chattanooga on Lee Highway is normally full, but as of now Lexus says it’s about half empty.

Ed Emerson has been in the business at Lexus of Chattanooga for 33 years and has never seen supply so low.

Emerson said, “We are delivering the cars as they come in, that’s why you see groundspace supplies remain very, very low. But to answer your question on the pre-owned side, we’re the same there, we’re selling all the pre-owned we can get, but we still set a record last month for this store.”

iseecars believes several of the national economic factors will hinder the market.

But this is not universally held.

Brauer said, “We’ve got inflation, we’ve got high interest rates. So consumers who have been buying a new or used in the last year, are being less aggressive.”

Weekly said, “I don’t think that in this market that we’re really seeing much of a change.”

McKamey Baker said, “We’re trying to save customers money as well. Some things are just out of our control, given the circumstances affecting our entire nation.”