If you’re shopping for a pre-owned vehicle, you’ll find prices are now at their lowest in four years. Edmunds.com reports that the average used car price decreased to $15,617 in the third quarter of 2013, making it the lowest in the last four years.
The reason for the drop is simple supply and demand. More Americans are financially able to buy and lease new cars lately, and the demand for used cars has dropped as a result. After the recession, demand was much higher and supply was less, which lead to higher prices.
Of course the most sought after cars are the low-mileage late model vehicles, preferably with a remaining warranty. Consumers who are able to buy a late-model vehicle with under 10,000 miles are getting a somewhat new vehicle with a much lower price tag than its brand new counterpart.
When the economy was suffering, many Americans were afraid to buy and commit to the expense of a new car, fearing for their jobs. However, new car sales has steadily grown for the past couple years. Analysts say in a recent Reuters report that sales could hit 16 million annually.
Another report from the National Automotive Dealers Association says that wholesale used vehicle prices dropped more than 3 percent in October. Executive Analyst for the NADA Used Car Guide, Jonathan Banks, attributes this to the shutdown of the U.S. government in October 2013. Through the year, however, vehicles up to 8 years old had an average price of around $15k, which was about equal to last year and actually higher than the 2011 average.
Franck Freon owns Pumpkin Fine Cars & Exotics in Egg Harbor Township, New Jersey. He hasn’t seen prices move much up or down lately. He says “For a nice Toyota Corolla or Camry, you’re going to pay strong money. It’s not only the luxury brands like BMW and Lexus. If you want good, strong quality, it’s expensive and it’s the market.”
He buys his vehicles from many sources, and says he thinks it will take years to have an increase of volume in the market, which will bring down prices considerably. As more vehicles that were leased are returned, more previously owned vehicles will be available for sale.