Supply of Used Cars Continue To Grow Forcing Prices To Drop
With more and more used cars entering the market place, used car prices continue to fall. The key catalyst behind the increase in used car supply is vehicles that are coming off of leases. It wasn’t long ago that most manufacturers had greatly reduced the amount of vehicles they were leasing. There were some that even stopped leasing cars during the Great Recession.
During the economic recovery, manufacturers have once again turned to leasing to spur new car sales. According to Manheim, it is estimated that 12 million vehicles will be coming off of leases and entering the marketplace by the end of 2019.
Because of this growing supply of used cars, prices are continually dropping. KAR Auction Services Inc, stated that used vehicle auction prices fell about 3% in 2016.
This increase in supply and drop in prices are great news for customers looking for a late model used car. These are the lowest prices have been for used cars since 2008.
Those customers that plan on trading in a vehicle in the next 6-18 months may not be so lucky. As auction prices continue fall, the value of their trade-in is going to fall as well. The new car they were thinking about buying could become more expensive by the month. The good news is that new car inventories are still extremely high, so hopefully manufacturers will keep pumping out discounts until they can straighten out their inventory issues.