Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Prices of Used Vehicles Likely to Remain High
McLEAN, Va. -- Average wholesale prices of used cars and light trucks up to eight years old will decrease by 0.5% to 1% this year, the NADA Used Car Guide reports. This modest drop will keep levels on par with 2012 and 14% higher than 2010.
“Economic growth is expected to accelerate to its fastest pace since 2005, keeping demand for new and used autos high,” said Jonathan Banks, executive automotive analyst for the National Automobile Dealers Association, which issued the report. “A strong economy, combined with other positive factors, leads to a more positive outlook for used vehicle prices in 2014,” he said in a prepared statement.
In 2013, auto-loan interest rates for new vehicles were at their lowest level in at least 40 years while lender willingness to extend credit was also very high, he added. “We expect credit to have a slightly less positive effect on used prices as they begin to normalize,” Banks said, ”but the credit environment will still remain very strong.”
NADA expects incentives for new vehicles to rise moderately, but the more discrete use of cash incentives and higher new-vehicle prices will minimize direct downward pressure on used prices. However, appealing lease and finance promotions, combined with an improving economy, will help steer more consumers toward purchases of new vehicles rather than used, Banks noted.
Late-model used vehicles will be more plentiful, but supply will stay well below pre-recession levels, NADA predicts. Last year’s 15.4% rise in manufacturer certified used-vehicle sales, predominantly derived from this age group, indicates there will be a strong appetite for these units, Banks said. These factors will help counter the downward pressure associated with higher supply. “A decline in the supply of older models, along with greater demand for older used vehicles in recent years, will keep prices high,” Banks said.
NADA expects that new market pressure and a higher supply of used vehicles will lead to a more substantial 1% to 2% decrease in prices for one- to five-year-old vehicles, while the tight supply of six- to eight-year-old units will result in prices remaining flat or rising slightly.
The National Automobile Dealers Association represents 16,000 new-car and -truck dealerships with some 32,000 domestic and international franchises.
Published by The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our twice-monthly print edition and to our free daily email.