Used car prices went up all year, but buyers may finally start to get a modest break.
The nation’s used car dealers have had operate with about 8 million fewer used cars and trucks over the past two years, resulting in higher used vehicle prices every month in 2009, according to an analysis by the National Automobile Dealers Association.
But an expected 15% rise in new vehicle sales this year could result in a flood of trade-ins, increasing the supply of used cars and helping to ease prices.
“We’ll start to see an ease to the used car shortage, but it will be several years before the supply returns to the average of the 1998-2007 period of strong new car sales,” says Paul Taylor, the association’s chief economist whose analysis is based on wholesale transaction prices.
Taylor says that not only were there fewer trade-ins last year, but fewer vehicles coming off lease and out of rental-car fleets. All are the traditional sources of late-model used cars. Don’t blamed the government’s cash-for-clunkers program:
It was not a reason for the increase in used car prices month-over-month from January through November, he said. “The cash-for-clunkers program removed only 690,000 used vehicles from the marketplace, and these clunker vehicles were largely undesirable anyway. Even if these vehicles hadn’t been recycled under the program, their worth as trade-ins was modest.”
Before 2008, used cars were profitable every year since 1980. Then in 2008, dealerships lost money on used cars when gasoline prices ballooned. No word yet on profitability of used cars in 2009.
