Used Car Prices In USA Highest In 16 Years

Used car prices in the USA are the highest they have been in the last 16 years according to USA today. Since 2008 alone, prices have gone up close to 30% and dealers are paying well over $10,000 in average for a used vehicle.

So why the sudden price increase? Well there are a number of factors and contributors to the change in pricing. One of the main factors is the recession. According to sources, studies show that people in the USA are keeping their cars for a longer period of time than before the recession hit. There are reports that cars are on the road about a year longer than in 2007. Since people aren’t selling their used vehicles, the used car inventory has gotten much lighter.

Another reason is that people are unwilling to sell their vehicles because they can’t get another car to replace their old one at a reasonable rate or can’t seem to get one at all. The devastation caused by the earthquake and tsunami in Japan is also a large factor in the used car price surge. Parts and vehicles that were once easy enough to get hold of are now becoming increasingly difficult to obtain, so car dealerships all across the USA are holding on tightly to vehicles that are typically made and imported from Japan, thus the demand has risen for these cars and so naturally the prices also rise.

Johnathan Banks, executive auto analyst for the National Automobile Dealers Association Used Car Pricing Guide says “You’re not going to find a situation like this very often. It does seem a bit odd that you can get a better deal on a new car than a used one. Lease or finance, a new car will, in many cases, cost about the same or less monthly.” But the increase in prices is not going to last much longer according to David Whiston, an auto analyst for Morningstar, he says that prices are at or near a peak. This indicates that it will soon be turning back around.

Manheim auction houses’ chief economist Tom Webb predicts that the price increase will only be around for another couple of months before levelling off. Numbers are also rising for the amount of vehicles being leased. Considering most leases are three year leases, the returns should put a good amount of used cars back on the market around 2014. Leases may have become more popular again due to more lenient terms from auto companies and lenders. With the used car shortage and better lending options, the marketing is certainly in favour of anyone looking to sell a used car and get a new one.

Source: USA Today, http://www.egmcartech.com/2011/05/28/used-car-prices-hit-highest-since-the-last-16-years/