Wednesday, August 3, 2016

Are Used Car Prices Going Down in 2016?

What Affects Used Car Prices?

If you drive a car, maintain a car, or ever think you may need to replace your current car, it is important to continuously remain up-to-date on how the marketplace is changing in relation to your car's value.

Back in May of 2011, USA Today published an article regarding pricing pressures in the used car market. The article describes the dramatic increase in used car prices due to a shortage in Japanese-sourced parts combined with a spike in demand for "smaller, fuel-thrifty cars." The solution among auto dealers was to encourage buyers to trade in their used vehicles for new ones.

Our takeaway from the article was that the car you are driving is holding its value well, and in 2011 more than ever. It paid to keep your car's maintenance and repairs in good order, allowing the opportunity for a trade-in.

Will Used Car Prices Drop in 2016?

Things have changed significantly in the past 5 years, resulting in a decrease in the value of used cars for the first time since 2008. In fact, according to the National Automobile Dealers Association (NADA) Used Car Guide, prices are expected to fall by 5 to 6 percent this year.

This trend has been explained in an article by Market Watch in March of this year. The major decrease of used vehicle prices has occurred for a number of reasons, including a post-recession economy and a growing popularity of leasing that has resulted in an increased supply of used vehicles, also known as off-lease vehicles.

Should You Buy a Used Car This Year?

If you are looking to purchase a used car, now is the time to do so. Considering that the most common leasing period is 3 years, this latest market trend is great news for buyers at least through 2018! Selling your car, on the other hand, may be worth waiting until the used car market sees new fluctuations.

The bottom line is, there are many different factors that affect used car prices, which is why we recommend paying close attention to the marketplace prior to making any sale or purchase decisions.

To learn more, please feel free to contact Keith Lewis and team at Motorplex today!