The Price of Pre-Owned Sedans Is on the Rise
Due to the fact that consumers are buying far fewer new sedans, the price for pre-owned sedan models is increasing across the board
Sales for new sedan models across the automotive industry are on the decline. As more drivers choose to buy crossovers and SUVs, sedans are beginning to pile up on dealership lots.
As such, one might expect the price for pre-owned sedans to be on the decline. However, recent reports suggest that the opposite is true, with pre-owned sedans recently becoming more expensive.
The underlying reason behind the growing transaction prices for used sedans is supply. Before a sedan can be sold as a pre-owned vehicle, it must first be purchased as a new vehicle.
Unfortunately, dealers are accumulating an overstock of sedans from the 2017 and 2016 model years that have yet to be purchased, and thus cannot be categorized as pre-owned vehicles. Furthermore, with automakers like Ford eliminating large portions of their sedan lineups, there are fewer sedans to sell in the first place.
The result is a limited supply of sedans with ever-growing price tags. Edmunds reports that the average transaction price for pre-owned compact cars rose by 3.9 percent in the first quarter of 2018, with an average transaction price of $13,464.
New vehicles are also becoming more expensive across the board. Drivers who would usually purchase new compact and subcompact sedans are turning to the used market instead, thus reducing the available supply of such vehicles by even larger margins.
This scenario places dealerships in a difficult sales dilemma. Customers who can’t afford these more expensive pre-owned sedans will likely turn to private sales, while customers who can afford these vehicles would probably be better off paying for a new sedan model, which would only be a few thousand dollars more.
The good news is that dealerships aren’t likely to charge any more for pre-owned sedans than they currently are, in fear of pushing away prospective customers. However, buyers will find it harder to negotiate on price, as dealers will have less room for such negotiations or discounts.
Customers might want to search for pre-owned sedans in metro areas, which generally carry a wider supply and variety of pre-owned makes and models. Still, until consumers start buying new sedans again, this market trend of more expensive pre-owned sedans is likely to remain.
News Source: Jalopnik
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