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Edmunds.com: Falling Used-Car Prices Likely to Affect All Buyers

February 11, 2014

SANTA MONICA, Calif. — A glut of vehicles hitting used-car lots will drive down prices as much as 2% this year, projects Edmunds.com, the premier destination for car shopping. And while that might be music to your ears if you’re in the market for a used car, Edmunds.com says that the trend will likely cause a ripple effect, influencing shoppers of both new and used cars.  

“Many car shoppers might not realize how much the new- and used-car markets feed off each other,” said Philip Reed, Edmunds.com senior consumer advice editor. “The boom in new-car leases, for example, is leading to a higher number of lease returns, which adds to the growing inventory of used cars, forcing their prices down.”

But the drop in use-car values, cautions Reed, could raise the monthly payments of new-car leases. Softer "residual values" — declines in what a car is worth at the end of the lease — are likely to cause higher monthly payments to make up the difference.

Edmunds.com pricing experts also expect the following changes in the coming year as used car prices fall:

  • Greater selection of used cars for buyers to browse: Some new-car shoppers who don't have enough money for the new car of their dreams could now find what they need on the used-car lot.
  • Better certified pre-owned (CPO) car deals: Manufacturers have strengthened these popular certified pre-owned programs by offering lower interest financing and including service plans. Now, with lower used-car prices, these factors combine to make for an even more attractive package.
  • Lower values on trade-ins vehicles: When the inventory is high, the value of used cars drops, and that applies to the car consumers are looking to trade in on their next vehicle purchase as well.

Comments

  1. 1. James Jarrett [ February 13, 2014 @ 09:27AM ]

    Don't believe that one bit. I sell pre-owned Trucks. All of these are being purchased at auction at book value or better.
    Edmunds really has its ear to the new car side and thinks that is how all used car purchases originate

 

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