For many car shoppers, they’ll be happy to learn that used car prices are falling overall, down 3.6 percent from last June. But not all buyers will reap the benefits.
New car sales in a recovering economy, plus some of the fallout from the “Cash for Clunkers” program 3 years ago, are helping the used-car market. Those buying compact and midsize cars, normally the most popular of the used-car segment, will be happy to learn that the average price of a compact car fell 8.5 percent, or $650 from last year; the price of midsize cars dropped $653, or 7.8 percent.
But the used truck and SUV market climbed by $223 and $896 per average transaction, respectively. And overall, prices in the used-car market still remain 1 percent higher than they were six years ago, before this whole recession started.
As if to temper this good news with an overwhelming amount of bad, analysts tell us not to get our hopes up—June’s prices last year were absurdly high, so any drop since then is going to seem more dramatic. “What consumers need to remember is that prices were so high last July,” said Jonathan Banks, an analyst for the National Automobile Dealers Association, “that any year-over-year comparisons are kind of irrelevant.”
By fall, the NADA predicts used-car prices to rise two percent, over 2011′s levels. “I don’t think we’re going to see a long-term easing in used car prices for another two years or so,” said Jesse Toprak, the vice president of industry analysis at TrueCar. “If you look at the market in general, where the supply is coming from, they are all based on the last three years of new car sales.”
Analysis from Polk says that the average car on the road today is more than 10 years old, as people hold onto their cars for longer. But even if it may take two years, as Toprak claims, signs of change are coming: new car sales are projected to hit 14 million by the end of this year, compared to 12.8 million at the end of last year. Given that 2011 saw the highest new car sales since 2008, we could see a resurgence of inexpensive used cars as demand turns towards newer, shinier cars.
Source: Detroit News