It’s a pretty good time to look for a used car.
Edmunds.com and NADA Used Car Guide both expect an end to five years of price increases in 2014.
Falling used car prices, brought on by a glut of vehicles hitting the used-car market, may be “music to your ears” if you’re buying, says Edmunds.com. Not so much if you’re selling or trading a vehicle.
“Many car shoppers might not realize how much the new- and used-car markets feed off each other,” says Philip Reed of Edmunds.com. “The boom in new car leases, for example, is leading to a higher number of lease returns, which adds to the growing inventory of used cars, forcing their prices down.”
NADA predicts prices of used vehicles up to four years old will decline an average of 2.5 percent in 2014. Prices of vehicles from five to eight years old essentially will remain flat. Collectively, NADA anticipates the average price of used vehicles up to eight model years old to decline 0.5 to 1 percent this year. That contrasts to price increases of 18 percent since 2007.
Edmunds.com pricing experts also expect the following changes as used car prices fall:
– Greater selection of used cars for buyers to browse. Some new-car shoppers who don’t have enough money for the new car of their dreams could now find what they need on the used-car lot.
– Better certified pre-owned (CPO) car deals. Manufacturers have strengthened popular CPO programs by offering lower-interest financing and included service plans. Now, with lower used-car prices, these factors combine to make for an even more attractive package.
– Lower values on vehicle trade-ins. When the inventory is high, the value of used cars drops, and that applies to the car you’re looking to trade in on your next car purchase as well.
The supply of vehicles will be greatest, and prices decreasing most, for the segments with higher new sales over the past few years – compact utilities, subcompact cars, luxury cars and utilities. Tight supply for certain truck segments – mid-size vans, large SUVs and compact/large pickups – will see prices increase once again in 2014.
Used car sales are expected to reach 42 million units in 2014, according to a report in Automotive News.
For more useful information, visit The Open Road blog at RoadLoans.com and search for “used car.”
Written by: Mark Macesich