Used-Car Prices Could Fall Over Next 12 Months


Used-car prices could fall 4% to 5% over the next 12 months, residual-values predictor ALG said in its latest monthly report.

The collapse in new-car sales during the recession left the market with fewer late-model used cars, and used-car prices have increased since mid-2009. In turn, buyers switched. In 2010, shoppers bought 3.2 used cars for every new car, according to data from Automotive News and CNW Marketing Research. That declined to 3.0 used cars for every new car in 2011, and through last month, it's at 2.9. As demand for new cars has picked up faster than demand for used cars, ALG said it "expects used market prices to drift back toward historical norms."

That could take some time, however. Used cars are still in short supply. It could take up to three years for used-car prices to decrease 8% to 10% from today's levels, ALG said, and prices wouldn't hit pre-recession levels anytime soon.

The slow decline will leave some shoppers in a tough spot, as it comes amid rising new-car prices. Last month, CNW said the average new car sold for $2,338 more than it did a year ago — up nearly 8%.

Like ALG, we've said used-car prices will stay high for years to come, but there's slight relief today. Auto auction company Manheim releases a widely cited Used Price Index, which in August declined for the fifth month in a row. Still, it remains elevated above any point before April 2010. CNW said last month that used-car transaction prices decreased year-over-year by $662, or 6.9%, at independent dealerships, but they moved up $117 (1.2%) at franchised ones. (Joe's Used Cars is an independent dealer; Joe's Chevrolet is a franchised one.) CNW doesn't track private sales, which make up some 30% of all used-car sales.

Why Used-Car Prices Will Stay High
Search for Used Cars Near You
More Automotive News

By Kelsey Mays | September 14, 2012 | Comments (0)


Post a Comment 

Please remember a few rules before posting comments:

  • If you don't want people to see your email address, simply type in the URL of your favorite website or leave the field empty.
  • Do not mention specific car dealers by name. Feel free to mention your city, state and brand.
  • Try to be civil to your fellow blog readers. This blog is not a fan or enthusiast forum, it is meant to help people during the car-buying process and during the time between purchases, so shoppers can keep a pulse on the market.
  • Stay on topic. We want to hear your opinions and thoughts, but please only comment about the specified topic in the blog post.
view posting rules

If you have a TypeKey or TypePad account, please Sign In

Search Results

KickingTires Search Results for

Search Kicking Tires

KickingTires iPhone App