According to an analysis, as new-car buyers flood showrooms, used car prices are hitting a four-year low, and they may go even lower next year as more new-car buyers trade in their oldies and more used cars with expiring leases show up on lots.
The average used car sold for $15,617 at a franchised dealership in the third quarter, the lowest since the same quarter in 2009, when they averaged $14,808, according to the analysis by car-pricing website Edmunds.com.
Prices have been easing for most of the year, and the third-quarter average was down 2.8% from the second quarter and 0.9% from the same quarter last year. Another used-car price watcher, Tom Kontos of Adesa Analytical Services, noted a tiny uptick in wholesale prices in October, but says the overall trend is down.
As auto dealers’ new-car sales are on track to exceed 15 million, the bonanza has meant a flood of trade-ins. To move them out, dealers have cut prices. Also, by 2010, cheap lease deals abounded, and dealers were eager to get those new cars into the hands of recession-weary drivers who were hesitant or just couldn’t make the purchase price payments. Those leased cars are coming back to be sold as used cars.
Richard Arca, senior pricing manager for Edmunds.com cautions, however, that used-car prices still aren’t as low as they dipped a decade ago. Prices of some late-model used cars still are so close to the price of a new car that it might make more sense to buy new, he says.