Used Car Prices Dropping

[rickaren]

Used Car Prices Dropping at Last

Nov. 11, 2009

Those of you in the used car market are in luck. After an unusual summer peak, prices are finally on the way back down.

USA Today reports, “Manheim Consulting's index of used car values dipped in October, its first decline since December 2008 when the index hit an all-time low.” The index measures the prices used car dealers pay at auction for the cars they later sell to car shoppers. “In the months since that December low, the index has climbed steadily, reaching an all-time high in September.”

Analysts blame the government’s recent gas guzzler rebate program for the spike. Kicking Tires explains, “The Cash for Clunkers program definitely led to higher used-car prices over the past few months,” as it lead car dealers to disable some vehicles that would have otherwise entered the used car market, restricting the supply of used cars. The drop in auction prices doesn’t mean prices at the used car lot will fall immediately, but KT says it “should have an impact relatively soon.”

New car sales figures mean encouraging news for the used car market as well. Manheim Consulting notes, “October new vehicle sales came in at seasonally adjusted annual rate of 10.5 million. It was the best, non-[Cash for Clunkers] induced sales pace of the year.” New car sales typically involve trade-ins, which add supply to the used car market.

LINK: Used Car Prices Dropping at Last - U.S. News Rankings and Reviews