overall used car prices downward from last summer

[Raybob]

Strong new car and truck sales, plus the dwindling effects from 2009's "cash for clunkers" federal program, have forced overall used car prices downward from last summer.
But the lower prices depend on what kind of vehicle you're looking for: The asking prices for trucks and luxury vehicles are actually higher than a year ago, and the reprieve may not last, some experts predict.
"Compared to last year, prices are down," said Jonathan Banks, executive automotive analyst for the National Automobile Dealers Association Used Car Guide. "But what consumers need to remember is that prices were so high last July that any year-over-year comparisons are kind of irrelevant."
Used car and truck wholesale prices were down 3.6 percent in June compared with the same month a year ago, but remain a full percentage point higher than the same time six years ago.
Compared with last summer, the best deals are among compacts and midsize cars: The price of compacts in June dropped an average of $650, or 8.5 percent, and midsize cars decreased $653, or 7.8 percent.
But the price of full-size trucks climbed $223, or 2 percent, and SUVs jumped $896, or 7 percent, in June compared with the same month a year ago.
"I think it's running kind of the same course," said Terry Templin, president and owner of Elite Motor Sales & Service, an independent used car dealer in Warren whose sales are comprised of mostly of trucks and SUVs. "Prices are up, and used car values are up."
NADA forecasts a 2 percent price uptick compared with 2011 prices in all used-vehicle segments heading into fall, with varying factors playing a role, including new-vehicle sales, the economy and fuel prices.
Some segments will fare better than others.
Luxury used vehicles, which have fallen in price overall but for those five years old or less, are at a premium. They'll have price jumps of more than 2.5 percent the rest of the year, NADA projects.
According to Tom Kontos, executive vice president of ADESA Analytical Services, these "vintage" cars that would have been sold in 2008 and 2009 if not for the economic collapse are the most popular.
Lower gas prices — some estimates have fuel prices dropping below $3 a gallon in most areas of the country — and restocked inventories will drive down prices of compact and midsized used cars, which could have further sticker-price slashes of 2.5 percent or more for the rest of the year. Lower fuel prices will keep demand for trucks and SUVs afloat, and those segments likely won't see price reductions, the experts say.
"The assumption is that gas prices are going to remain relatively low and the supply of the small cars is one segment where they're more readily available," Banks said. "If I was a consumer and had been thinking about a small car, the next three months might offer some opportunity."
Tight supply

As recession-wary motorists held onto their cars longer — meaning there were fewer used cars on the market — the average age and prices of used cars went up. The average car on the road today is more than 10 years old, according to Southfield-based R.L. Polk & Co.
"Cash for clunkers" also played a role. The federally funded program took automobiles destined for used-vehicle lots and crushed them, resulting in a shortage of used vehicles.
But with new vehicle sales expected to top 14 million in 2012, thanks in part to newer-model used vehicles being priced similarly to new cars because of low inventories, the used-car inventories are slowly building. But it will still be a couple of years before used-vehicle prices return to pre-recession levels, Kontos said.
"Just as the tightness of supply was a reflection of the recession …," Kontos said.
"Just because the spigot is turned on, doesn't mean it's turned on all the way."
That spigot could still get clogged if new-car sales don't keep pace with their 14-plus million annual sales range.
"I don't think we're going to see a (long-term) easing in used car prices for another two years or so," said Jesse Toprak, vice president of industry analysis at TrueCar.com. "If you look at the market in general, where the supply is coming from, they are all based on the last three years of new car sales."
Incentive game

A drop in demand could force manufacturers to offer more incentives to sell new cars and trucks, once again narrowing the price gap between new and used vehicles — particularly, used vehicles that had previously been leased. What it means for consumers: oftentimes little difference between the price of a new and used vehicle.
The average price for new light vehicles is $30,508 according to TrueCar.com, up 2.9 percent compared to last year. Only Ford Motor Co. and General Motors Co. had year-over-year transaction price declines.
Used-car transaction prices, meanwhile, will continue to remain inflated compared to historic levels when sold at new-car dealerships. This is because of financing relationships between the manufacturers and lending arms, which allow the new-car dealers to sell the used vehicles at higher rates based on value.
"Banking and financing have come around for independent car lots," Templin said. "But a new-car dealer can (still) sell a used car for more than I can."


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http://www.detroitnews.com/article/2...-some-segments

[cruiseforever]

Have to agree with the new vs the used. Went shopping for a used truck came home with a new truck for less money than the used one that drew me into the lot. Ford had some very nice rebates. It's first pickup that I ever bought new. Still a strange feeling looking at a low odometer.

[eyewinder]

My recent experience similar to "cruiseforever's".

My new Silverado is way-y-y-y more truck than I had intended to replace my 2001 with. But, with rebates, low interest rates (3% from my credit union), etc., buying new made more sense to me than buy a vehicle with 20,000 to 40,000 miles on it.

[Phil T]

It's been that way at least since 2009. I bought a new 2009 pickup in December 2009 because it was cheaper than a similar 2 year old one.
Auto sales had to increase this year. My accountant told me that the average age of a car in the US last spring was 11 years old.