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Wednesday 23 August 2017
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Used Car Values Update – Car Pro Commentary

Used Cars III have talked many times over the past year couple of years on The Car Pro Show about sky-high used vehicle prices. It is the most unusual thing I have seen in 35 years of watching and reporting on the auto industry. Going back four years, we could count on truck and SUV prices falling when gas topped $3 per gallon, but that hasn’t been the case in recent times.
We know the reason for the high prices of late model used cars, it was a shortage. Since 2008, there have been fewer trade-ins on the market and leasing dried completely up and except for luxury cars, was almost non-existent. A normal leasing year in 2008 and 2009 would have dumped thousands of cars on the market last year, but they just weren’t there. Many of the rental car companies also scaled back operations or went out of business, which was another stream of used cars.
One of the reasons the auto industry has been on the upswing in the past three years is because of the high used car values. Fewer people were “upside down” in their cars, meaning they owed more on their car than its actual value. More people had a surprising amount of equity to help them purchase their new vehicle.
There is now very concrete evidence that prices will start to fall on used vehicles. Used car prices so far for June have taken the biggest plunge year to date. In the first three weeks of this month, prices fell 1.4% across the board. Half-ton trucks and large SUVS were the only segments that were up.
Sports cars showed some increases as Camaro, Challenger, and Mustang values were all on the upward trend. Very fuel-efficient vehicles like Toyota Prius and Camry Hybrid suffered large drops, as gas prices trended downward.
According to the good folks at Edmunds.com, the projected number of vehicles coming back from leases this year will be almost 2.6 million vehicles, an increase of over 600,000 vehicles from 2012. That is a significant increase and could drop used vehicle prices even further
If the economy continues to improve, a conservative estimate of new car sales is a 10% increase in 2013. That is roughly an additional 1.4 million sales next year, with the large majority of those having trade-ins.
Roll all those factors into the mix and it appears the used vehicle shortage will turn into a used vehicle surplus in pretty short order, and the used values will continue to fall.
Take this into consideration when trying to figure out the best time to purchase a new vehicle. Late model used car values have been up $2000 or more in the past year, and odds are, prices will fall by at least that much in the second half of 2013.




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