If you’re looking for a new vehicle, but the prices are too steep for comfort, take a look at the amazing range of used vehicles available now for a fraction of the price. The discounts are steep, particularly on popular hybrids and smaller vehicles.
Prices have been plunging for about the last two years, and the decline is expected to continue steadily for the rest of 2013. There are some things to consider that do make the used vehicle market somewhat volatile. For example, prices on used cars are usually higher at the beginning of the year, which is auction time for dealers who buy for the spring selling season. The prices generally go down as the year progresses. Kelley Blue Book’s Alex Gutierrez estimates that the price of a three year old vehicle fell 4 percent just between April and June.
Car auctions are run by companies like Manheim, which is a division of Cox Enterprises of Atlanta. The company reports that the average price for a used car at auction this past June was $11,031, which is 6 percent lower than in May of 2011, when prices peaked. In fact, the peak in 2011 was the highest since 1995, when Manheim began collecting this data.
At auctions such as Manheim runs, vehicles that were previously leased or rented belonging to banks, auto financing operations, rental companies and car dealers are sold. Auto dealers buy the cars to sell at a profit. The auction prices help set the prices for individuals who want to sell at the market rate.
In 2009, new car sales plummeted to 10.4 million, which was a 30 year low. Following this, used cars were in such short supply and the prices so outrageous that buying new was more economical. Now the situation has normalized, and as of 2010 new car sales have increased steadily. More used cars are available now as a result, offering excellent prices for savvy shoppers. A three year old vehicle now costs 25 to 30 percent less than the manufacturer’s suggested retail price on the current new model.
In the last half of 2012, the price of a used car dropped by $1,000 per car. Gutierrez expects that the decline will be similar for the second half of this year. Mileage and age also are factors in determining the price of a used vehicle, and demand may increase as more people find jobs, but used vehicles will continue to be an economical choice for buyers looking for a bargain.