Why Have Used Car Prices Not Come Lower?

The costs of used cars started to increase once the recession hit in 2008. That increase in prices was because of the reduction in quality late model used autos entering the marketplace along with a rise in the interest in them. Since the current recession is ending and new cars can sell again, it might appear the prices of used ones should begin to go lower. That isn’t what’s happening. Actually, individuals costs are really going greater. Now you ask , why? The simply response is there are simply not enough good used cars out to satisfy the growing demand.

Auto makers created 6 000 0000 less new vehicles throughout the recession. Consequently, you will find 6 000 0000 less quality used cars that may go into the market. This Year’s Cash for Clunkers program also decreased the amount of used cars entering the marketplace. As the program is built to promote the purchase of recent cars, additionally, it required almost 700,000 used cars which were drivable off course and destroyed them. Had they not been destroyed, individuals vehicles might have made their method to used car lots.

Used car dealers obtain cars from four places. Certainly one of greatest suppliers recently model used cars was from vehicle rental agencies and firms which have fleet vehicles. Prior to the recession, these places would replace their vehicles every 2 yrs. Now, they’re replacing them every 4 or 5 years. A lot of companies have eliminated fleet cars entirely. Another source recently model vehicles for dealers is leased cars which are in the finish of the lease. The banking crisis that began the current recession forced vehicle manufacturers and lenders to prevent leasing cars due to the risk. Leasing has become back, but individuals cars won’t enter the marketplace for a minimum of 2 or 3 more years.

Another supply of vehicles for used car dealerships is thru trade-ins. Individuals are keeping their cars longer now. The typical is eleven years. Therefore, the caliber of the trade-ins has dropped considerably. Car dealers aren’t thinking about cars the old since it is difficult to sell them.

A forth supply of used cars is thru repossessions. Lenders had much stricter loan needs throughout the recession. Consequently, less dangerous vehicle loans were created. Because of this, the amount of repossessed vehicles is lower considerably.

A lot of individuals lenders have finally relaxed the needs to ensure that more and more people will be eligible for a a vehicle loan. The greater people who are looking for late model used vehicles the greater the costs is going to be. The increasing cost of gas is yet another factor that’s fueling the interest in smaller sized, more energy-efficient used vehicles. That demand is actually causing the price of four cylinder cars and hybrids to escalate.

Except for trade-ins, used car dealers obtain inventory from auctions. The costs recently model, fuel efficient cars, light trucks and SUVs has soared in this past year. The dealership doesn’t have choice but to pass through that cost along towards the customer.

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