Used car prices fall
It’s getting easier to find a bargain on a used car. As new car sales rise, more used vehicles hit the market.
Associated Press
DETROIT — Used car prices finally are falling off their 2011 peak.
The price of a 3-year-old car fell 4 percent between April and June, estimates Alex Gutierrez of market researcher Kelley Blue Book.
Prices for used cars are typically higher at the start of the year, when dealers buy cars at auctions in advance of the spring selling season. They decline as the year goes on.
By June, the average price for a used car at auction was $11,031, down 6 percent from its peak in May 2011, national auction operator Manheim reported this week. The 2011 peak was the highest price Manheim had seen since it began collecting data in 1995.
Used- car dealers get many of their cars from auctions run by companies like Manheim, a division of Cox Enterprises of Atlanta.
At Manheim-run auctions, banks and auto company financing operations sell cars that have come back after leases expire. Rental car companies and car dealers also sell cars there. Used dealers buy the cars and sell them for a profit.
Auction values also help set prices for individuals who want to sell their cars at the market rate.
In 2009, new vehicle sales fell to a 30-year low of 10.4 million. Two years later, used cars were in short supply, and prices got so high that it made sense for consumers to buy new.
Things have turned around. New car sales picked up starting in 2010, and now there are far more used cars in the pipeline. Buyers shopping for a 3-year-old used car can expect to pay 25 or 30 percent less than the manufacturer’s suggested retail price for a current new model.
The average retail price of a used car fell by $1,000 per car in the last half of 2012. Gutierrez expects a similar decline in the second half of this year. Keep in mind that used car prices vary widely based on the age of the car and the miles it has been driven.
The price declines will be gradual. While more inventory is helping to lower prices, demand is rising as more people get jobs and need vehicles for work.
Gutierrez estimates that a 3-year-old car cost an average $19,000 in June. By comparison, a new car averaged $31,663 last month. That’s up $307 — or around 1 percent — from April.
Used cars are big business. Every year around 40 million are sold in the U.S., compared with 14 or 15 million new cars.
If you’re looking for a used car, check prices online, and then decide whether you want to go through a dealer or through an individual.