Used-car market more inviting
DETROIT — Is that new set of wheels out of your price range? Used cars have gotten more affordable, especially if you're looking for a small car or a hybrid.
Used car prices have been falling since 2011, and they're expected to decline gradually for the remainder of this year. That's good news for those joining or re-entering the workforce, or anyone else who might find a payment on a new car too steep.
There is some volatility. Prices for used cars are typically higher at the start of the year, when dealers buy cars at auctions in advance of the spring selling season. They decline as the year goes on. The price of a 3-year-old car fell 4 percent between April and June, estimates Alex Gutierrez of car-pricing company Kelley Blue Book.
Used-car dealers get many of their cars from auctions run by companies like Manheim, a division of Cox Enterprises of Atlanta. The average price for a used car at auction was $11,031 in June, down 6 percent from its peak in May 2011, Manheim reported this week. The 2011 peak was the highest price Manheim had seen since 1995, when it began collecting data.
At Manheim-run auctions, banks and auto company financing operations sell cars that have come back after leases expire. Rental car companies and car dealers also sell cars there. Dealers buy the cars, mark them up and sell them for a profit.
Auction values also help set prices for individuals who want to sell their cars at the market rate.
In 2009, new vehicle sales fell to a 30-year low of 10.4 million. Two years later, used cars were in short supply, and prices got so high that it made sense for consumers to buy new.
Things have turned around. New car sales picked up starting in 2010, and now there are far more used cars in the pipeline. Buyers shopping for a 3-year-old used car can expect to pay 25 percent to 30 percent less than the manufacturer's suggested retail price for a current new model.
The average retail price of a used car fell by $1,000 per car in the last half of 2012. Gutierrez expects a similar decline in the second half of this year. Keep in mind that used car prices vary widely based on the age of the car and the miles it has been driven.
The price declines will be gradual. While more inventory is helping to lower prices, demand is rising as more people get jobs and need vehicles for work.
Gutierrez estimates that a 3-year-old car cost an average $19,000 in June. By comparison, a new car averaged $31,663 last month. That's up $307 — or about 1 percent — from April.
If you're looking for a used car, check prices online and then decide whether you want to go through a dealer or through an individual. Private sellers will often give you a better deal, but dealerships offer certified pre-owned cars that have gone through inspections and may offer better warranties.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Federal appeals courts disagree on Obamacare subsidies
- Latrobe’s Ci Medical Technologies transforms to medical device business
- Allegheny Technologies reports 2Q loss despite higher sales
- Gas pipeline issues challenge for producers, users
- U.S. stocks slip to start the week; Six Flags sinks
- Congress may crimp offshore merger tax relief
- Checking account holdings reach 25-year high
- Grads’ starting salaries way behind average
- Workers strive for independence in ‘flex economy’
- Entrepreneurial teen mines bitcoins, contributes toward electric bill
- AK Steel to acquire Severstal plant in Michigan for $700M