Used Vehicle Prices Remain Unexpectedly High, But Could Actually Be Good News
It doesn’t feel like it was very long ago that the financial crisis hit and turned many markets—including the automotive one—upside-down. The turmoil forced many consumers to empty the used car market of affordable options and even choose to lease instead of buy their next cars.
This year, economy experts were anticipating used car prices to finally drop to more palatable levels as leased cars returned to dealerships and refilled inventory.
However, things haven’t gone exactly as planned, and used car prices haven’t budged. While that might be bad luck for shoppers, it might actually be good news for the industry as a whole. Here’s why.
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Why High Used Car Prices Are Good for You
Automakers have been bracing for the anticipated return of millions of leased vehicles (11.3 million by 2019, by J.D. Power’s estimates) to be sold as used units, causing them to reduce profit on new cars to remain competitive. However, instead of used prices falling, they’ve actually been rising to record highs this year.
While that probably aggravates many shoppers who’ve been waiting for an affordable used car, this trend does have its benefits. Higher pre-owned prices mean less drastic depreciation rates and thus higher vehicle values—particularly affecting trade-ins and private sales.
Additionally, these higher-priced used vehicles are often in better condition than they used to be—the higher selling points reflecting the widespread success of certified pre-owned programs that ensure vehicles are up to snuff. Even domestic automakers are producing better-quality vehicles for their fleet and rental programs, which used to be pits for dumping cheaper versions of their models.
While high prices for pre-owned cars might frustrate you at first, they’re actually good news for the investment you’re making in your next vehicle.
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News Source: Fox Business