Used Car Prices Are Rising When They Should Be Dipping

Late summer periods are usually synonymous with decreasing used car prices in the US. However, this year’s numbers are unusually strong thanks to increasing demand for used vehicles and concerns over potential tariffs.

Another reason why this could be happening is the fact that dealerships are beginning to focus more on moving pre-owned vehicles, as opposed to previous years. Of course, the phenomenon could be a result of all these factors put together.

“It’s been a crazy year for used-vehicle pricing,” stated Zohaib Rahim, Cox Automotive manager of economics and industry insights, who went on to say that his company’s Manheim Used Vehicle Value Index ended July at its highest point ever, up 1.5% over June and 5.1% over the previous year.

“That’s not alarming, but it’s very abnormal. We don’t see this price trend this part of the year,” added Rahim. “Used-vehicle prices typically peak in spring, so March and April, and they decline the rest of the year.”

Meanwhile, KAR Auction Services CEO, Jim Hallett told Automotive News that their analysts expected a 3 to 5 percent drop in used car pricing, whereas instead what they found was that prices had “held up very, very strong.”

KAR executives have attributed these high prices to flat new-vehicle incentives (partly), which in turn bolster used-vehicle values. Also, potential tariffs on imported vehicles could also lead to consumers rejecting the new-vehicle market in favor of something pre-owned.

“People are thinking about these tariffs and what could come out of that, and I think that’s making used cars more valuable,” concluded Hallett.

Of course, there’s also the issue of the recession that struck the world roughly 10 years ago – its effects still being felt to this day.

“We sold so few cars in 2008, 2009, 2010, 2011 that now there’s not a lot of inventory for the used market for these 7-, 8-, 9- and 10-year old vehicles,” argued Cox Automotive senior economist, Charlie Chesbrough. According to him, this has forced many dealers, especially independent ones, to buy newer vehicles.

  • People are discovering that recent model cars are more reliable, cheaper and more content than a new model. A case in point, old Jettas with IRS vs new Jetta with torsion beam.

  • CauseAndEffect

    Manufacturers are focusing more on suvs and trucks limiting the supply of cars. Chrysler only sells 2 car styles. Mercury is no more. Ford will only sell 2 car models soon. Limited model supply leads to increase in price. Basic economics.

  • Mark Weiner

    Cars continue to get more expensive every year so it would seem likely that this would make used cars more expensive to buy and more valuable. Plus the new tarriff that will be affecting new cars soon should factor into even higher prices.

    Used cars, particularly certified used cars, are very desirable… they have the benefit of already being depriciated in the first three years and have a lot of life left … they are a great value for people who don’t want to purchase a brand new car..

    Plus, they have the benefit of being vetted for problems usually associated with a brand new model…by the 3rd year you’ll know whether the car has a good track record of repairs… You’ll never know with a brand new car…

    The ONLY good reason for getting a new or late model car is safety features….. otherwise, a good used car is the best value.

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