Will The Price of Used Cars Ever Come Down?


used cars louisville kyNow that the new car market is finally picking up, the question becomes.. How long till the price of used cars starts to drop to the point where consumers will see better deals?

All said new vehicle sales is up across the board with US Automakers reporting a 15% rise for the month of July as compared to last years numbers.

This is great news for the US Auto industry, and is a reflection of some more than obvious factors. The first being pent up demand that’s finally relieving itself.

Simply put, consumers have been putting off the purchase of new automobiles because of the American economy being in the tank for so long. What with the average price of a new car running around $30.000.00 dollars it’s easy to see how your average American is pretty close to being priced out of the market. This has resulted in putting off trading in on a new car every few years to stretching it to maybe 4-5 years till trading in on a new one.

As used car dealers, visiting the large dealer auctions is part and parcel of our business, and in the past (Pre 2008) bidding on the previously owned cars that new dealers take on trade provides a steady stream of quality units with under 100k miles for us to stock on our lot. Over the last 5 years we’ve steadily watched the average miles on new car trade ins at the dealer auctions go well over 100k miles and beyond, with the average we see here in the Louisville KY used car market, being around 110K to 130K on the cars we see at the auction block.

In addition to seeing the higher miles in Louisville we’ve seen higher prices accompanying them. With the new car market having been down these last 5 years, there have been less trade ins appearing at the auctions. What with supply and demand working the way it does, the fewer new cars being bought has meant fewer cars being traded in on new car purchases. Hence the price of used cars steadily rising over these last 5 years. Finally now we have the good news being that with the recent rise in better economic numbers, it seems to be motivating the pent up buying public to finally entertain purchasing a new car. And they are!

So When Will We See Used Car Prices Come Down?

As used car dealers we hope it’s soon. But the reality is that it will probably take more than one good summer of new car sales, to effect the supply of readily available used cars to have a positive influence on auction prices. And auction prices are in direct relation to used car lot prices. The lower of a price we can buy them for the lower of a price we can we put on the windshield. So let’s all hope the American new car market sustains the boom it’s seeing this summer. History has show over and over that when new car sales stay up over a period of a year or two, used prices invariably come down.

 

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