According to the NADA, used car prices are up 32% since bottoming in 2008. That’s a lot of value appreciation for an asset that depreciates. That means, if you’re looking to purchase a new car, now could be the right time to do so. You can get some great incentives in the competitive auto marketplace right now, and you’ll get high value for your trade-in.
However, if you’re looking to purchase a used car, you’ve probably been discouraged by the prices on the market. Luckily, there appear to be a few factors that may help to ease used car prices in 2013.
- Edmunds.com projects that there will be about 500,000 more expiring leases in 2013 than in 2012. That bodes well because these previously leased calls will be sold as certified pre-owned. The people purchasing these CPOs will also be getting rid of their current card, which means that the used cars will trickle down the market.
- Housing prices have continued to climb, particularly in major metro areas around the U.S. This increase in real estate prices results in people feeling wealthier, and thus, spending more. This means increased purchase of new cars, resulting in used cars being unloaded.
- The year with the lowest new auto sales in the past 30 years was 2009. New cars often get sold on the used card market, in one way or another, about three to five years after originally being purchased. That means, going forward, we should have more people looking to sell their vehicles since we’re nearing the end of that 2009 window.
Unfortunately, the continue shift toward gas efficient vehicles and the need for trucks to supply to increased construction activity will apply upward pressure on used vehicle prices. It’s unclear when use car prices drop a significant amount. In the end, it probably makes sense to buy the used car you want, when you need it. The average used vehicle is somewhere around $15k. A drop of 10 or 15% would sure be nice, but it’s probably not something worth waiting due to the uncertain timing and magnitude of any decrease, as well as the minimal impact that it has on the overall cost of vehicle ownership.