Industry News: Demand for Used Cars is Rising

[William Maley]

New cars are getting more and more expensive. Kelly Blue Book reported earlier this month that the average transaction price of a new car was $35,541, up 1.8 percent compared to the same time last year. This has more consumers checking out the used car lot, causing demand to rise.

“Customers forget a new car is now more than $30,000 and they expect it to be $20,000,” said Brian Allan, a senior director at Galpin Motors Inc., to the Wall Street Journal.

“When people see the price has gone up, it is sticker shock, especially when people only buy a car every five to six years."

Data from Edmunds reports that the gap between the price of a new and used car is now at one "of its largest points in more than a decade". Key reasons for this gap include consumers trending to trucks and SUVs, and automakers adding more expensive tech.

This summer saw a strong demand for used cars and analysts are predicting this trend to continue throughout the rest of the year, partly due to dealers stocking more trucks and utility vehicles. Prices of used cars are also on the rise. Edmunds reports that buyers paid an average of $22,489 for a three-year old used car in the second-quarter - up $865 from the same time last year.

This isn't good news for automakers as new car sales are starting to slow down and pressure could begin building to deepen discounts to lure consumers back. Lenders have been extending the length of loans and introducing 0 percent financing to make buying new more attractive.

Source: Wall Street Journal (Subscription Required)

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[ykX]

Makes sense.

The only good news is that there will be more used cars as more and more people lease instead of buying,  Still, all the prices are going up.

[G. David Felt]

Trade wars do not help this. I expect massive price jumps due to ignorance in government about global business and proper negotiating skills rather than a brutt on the playground with a bat approach to trade..

[Drew Dowdell]

Excellent pic for the article too

[A Horse With No Name]

1 hour ago, dfelt said:

Trade wars do not help this. I expect massive price jumps due to ignorance in government about global business and proper negotiating skills rather than a brutt on the playground with a bat approach to trade..

Yeah....agree...but there is a reason the politics section got closed here. 

[smk4565]

Probably at the rate we are going a base 2025 Camry will be about $44,000 while the average American household has a $60k income compared to today when a base Camry is $23k and the median household income is $59,000.

[daves87rs]

Just going to be careful what I buy.....

[riviera74]

This is no surprise at all. 

When leasing new and buying used is a total norm as opposed to an exception, something is very very wrong here.  New car prices could stand an across the board 25% price cut.  Too bad no automaker will actually make a $10K new car since there seems to be too little profit in that.

[regfootball]

 

“Customers forget a new car is now more than $30,000 and they expect it to be $20,000,” said Brian Allan, a senior director at Galpin Motors Inc., to the Wall Street Journal.

---------people want a loaded CUV but still want to only pay for the basic mid sized sedan. And TBH that is sort of my thinking too.

 

“When people see the price has gone up, it is sticker shock, especially when people only buy a car every five to six years."

-------Yup that too.  It is rare and a treat for people to buy A car, much less a new one, even as often as every 5-6 years.  So when prices do go way up you can clearly see it does create shock.

 

Data from Edmunds reports that the gap between the price of a new and used car is now at one "of its largest points in more than a decade". Key reasons for this gap include consumers trending to trucks and SUVs, and automakers adding more expensive tech.

-------I believe this.

 

This summer saw a strong demand for used cars and analysts are predicting this trend to continue throughout the rest of the year, partly due to dealers stocking more trucks and utility vehicles. 

------yup we're starting to see the first huge wave of mass used CUV's.

 

I think the proliferation of all this new safety and autonomous tech, and touch screens and stuff, and complicated powertrains, has scared away some new buyers too.  The see having to pay big money for breakdowns on non essential stuff.  Less risk now to buying a used vehicle with a limited amount of items to malfunction or go wrong.

To me back ten years ago, it was that you wanted to be sure to have the proper airbags, stability control, and maybe bluetooth.  Then you'd have enough of the new stuff.  But now, there is auto emergency braking, lane keep assist, turbos, AWD, expensive touch screens.  If you don't buy new to get those fancy things you may be more prone to avoiding that stuff buying used because way less cost and more simplicity.  Just a theory.