Used-Car Prices Drop to 4-Year Low in Q3
As reports came in this week outlining used-car auction price drops last month, the Edmunds.com Q3 Used Market Quarterly Report released Wednesday claims that pre-owned prices have dropped to a four-year low on the lots.
As used supply continues to increase, putting downward pressure on used prices, Edmunds.com reported the average used car sold by franchised dealers in the third quarter was priced at $15,617.
This is 2.8 percent lower than in the previous quarter, and 0.9 percent lower than rates seen during the same period of 2012.
Edmunds.com reported the last time used-car prices ran so low was in the third quarter of 2009, when the average car sold at a franchised dealership was $14,808.
After years of high prices, this news might serve to bring significantly more consumers out onto the used-car lots.
And even though Edmunds.com reported Q3 used-vehicle sales came in at 9.3 million, down 0.6 percent year-over-year, franchised used sales have increased — rising 2 percent to come in at 2.81 million this past quarter.
Where are the best deals?
Edmunds.com said Volvo, GMC and Chevrolet vehicles stayed on used dealers lots the longest in Q3, and lack of demand will serve to push these brands' rates down even more.
On the other hand, Japanese brands such as Honda, Toyota and Lexus were in the most demand in the third quarter — “and therefore likely carried the most elevated prices,” Edmunds.com reported.
By segment, the entry luxury car, large crossover SUV, and premium sport car segments saw the biggest drops from last year, down 6.2 percent, 5.9 percent, and 4 percent, respectively.
On the other hand, the van segment made the largest year-over-year jump, rising by 9.5 percent in Q3, according to Edmunds.com data.
And the price drops aren’t expected to stop here.
"Used car prices will likely continue to decline in the coming months simply because there will be more of these vehicles sitting on dealer lots,” said Edmunds.com's director of used car analysis Joe Spina.
New-car sales in Q4 may serve to push rates down further, as well.
“As we head into Q4 2013, consumer interest will continue shifting to new vehicles with the end-of-year sell-down of 2013 model-year vehicles,” the report reads.
Analysts explained that increased trades from these new-car deals will work to create more supply, and in turn, will lower prices on pre-owned vehicles.
Editor’s Note: For more insight from the Q3 report from Edmunds.com, see the Friday edition of Auto Remarketing Today.