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Used Car Prices Crash To 2009 Levels Amid Glut Of Off-Lease Supply

With Increased Volumes of three-year-old vehicles coming back into the market at the end of their Lease Terms, Used Car Prices are Crashing to their Lowest Levels Since 2009.

The U.S. auto market is at an interesting crossroads with used car prices crashing to new lows every month while new car prices continue to defy gravity courtesy of a somewhat 'frothy', if not suicidal, lending market that has seemingly decided that anyone with a pulse is financially qualified for a $0 down, 0% interest, 80 month loan on a brand new $40,000 luxury vehicle of their choice.  

As the Labor Department’s consumer-price index data showed last Friday, used car prices once again dropped in July to the lowest level since the 'great recession' of 2009.  In fact, since the end of 2015, the cost of used vehicles has dropped in all but three months and are now roughly 10% off their 2013 high.



Unfortunately, the outlook for the used market is only expected to get worse with the volume of lease returns expected to soar to nearly 4mm units by 2018.

Auto Leases


Meanwhile, despite modest weakness over the past two months, new car prices have held up fairly well...


...even as the domestic auto OEM's continue to flood dealer lots with new inventory that isn't moving.


Of course, logic would dictate that some level of substitution would have to take over at some point as the financial benefits of buying a used car eventually outweigh the social indignity of cruising around town in a 3-year old clunker.  

That said, those innovative "Low Credit Score" discounts do make new car buying very attractive...




Views: 799

Tags: 2009, Amid, Car, Crash, Glut, Level, Lowest, Of, Off-Lease, Prices, More…Since, Supply, To, Used


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Comment by Ralph Paglia on August 16, 2017 at 5:03pm

Maybe its because I now live so close to a major port, but it sure looks like a lot of American used cars are being loaded onto ships and sold to people in other countries... Will export demand impact pricing here in the US?

Comment by Don Ruguleiski on August 16, 2017 at 4:31pm
I think the point is not what's going on now but what is likely going to happen. We all know when the lenders decide to stop sitting on stacked up lease returns that aren't bringing "top dollar" and decide to liquidate we'll be in for a ride. I'd prefer not to be holding onto too much of that inventory.
Comment by John Roberts on August 16, 2017 at 3:59pm

Look at the sale prices on 2014 Ford F150s and tell me they are down.

Comment by Ralph Paglia on August 16, 2017 at 3:53pm

John Roberts - I hear you loud and clear... And when I go to CADE in Anaheim I'm seeing the same thing you see online, used cars bringing top dollar. However, the national data trends on three-year-old vehicle selling prices do not lie. As the first charts show, prices have declined.

Comment by John Roberts on August 16, 2017 at 3:39pm

I am online buying cars at auctions three days a week and I have not seen any evidence of this being true. Prices have not dropped on late model vehicles, in fact they have gone up. 

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