Tags: used | cars | price | sales

USA Today: Bargains Are Growing in the Used Car Market

Thursday, 14 Nov 2013 01:17 PM

By John Morgan

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Used car prices in the United States have sagged to a four-year low and are bound to go even lower due to a perfect storm in the economics of auto pricing, USA Today reported.

The average used car sold for $15,617 at franchised dealerships recently, an analysis by Edmunds.com showed.

Tom Kontos of Adesa Analytical Services told USA Today there are multiple reasons for the price weakness. One big factor is how well new car sales are doing, and they are doing much better than in recent years. New car sales are on pace to exceed 15 million, which has sparked a wave of trade-ins and put price pressure on used models.

“New cars automatically bring some used cars out of the woodwork,” said Kontos.

Also, a big uptick in attractive lease deals in 2010 is also affecting the market, as many of those leases are expiring and the cars are ending up in used car lots.

A lower jobless rate, a stronger economy and continued low loan rates are also driving new car sales, USA Today said.

Kontos said that because of the gradual nature of the economic recovery, there still has not been a big flow of used cars into the market as new car buyers continue to step up. But he predicted more used-car price declines as the replacement cycle continues.

“The used-car market, in terms of pricing, is poised for further softening,” Kontos said.

Edmunds.com’s director of used car analysis, Joe Spina, agreed. "Now that the new car market has hit its stride, buyers are no longer drawn to used cars the way they have been in recent years. Used car prices will likely continue to decline in the coming months simply because there will be more of these vehicles sitting on dealer lots,” Spina said.

Edmunds.com reported that shoppers looking for the best used car bargains should consider brands such as Volvo, GMC and Chevrolet as those automakers’ vehicles sat on used dealer lots longer than any other brand in the third quarter.

Japanese brands such as Honda, Toyota and Lexus were in the most demand by used car shoppers in the third quarter, Edmunds.com said.

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