The Average Price of Used Vehicles to Drop 8-10%

by Admin on November 1, 2012

According to ALG’s Industry Report released early September, the average price of used vehicles will drop 8-10% over the next 2-3 years.

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“There just aren’t enough vehicles out there relative to used-car demand.” Eric Lyman, VP of Residual Value Solutions, ALG.

To get more specific, ALG says that a specific car will have a residual value of 45% of its new-car sticker price after three years. That is a pretty massive difference.

Not only will this affect the used vehicle market, it will also affect financing. Because of this change, financial institutes will use this forecast to determine how much to charge for a three-year lease for used vehicles.

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This change in values will challenge car dealers because they will have to ask consumers to make higher monthly lease payments according to Lyman.

“The bottom line is your lease payment is determined by the difference between your transaction price and your lease-end residual value.”

There is a prediction for used-vehicles prices to drop, but the size of the decline is unknown.

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“The supply right now is so low, that it is controlling everything in the used-market values. There just aren’t enough vehicles out there relative to used-car demand,” Lyman said.

Used vehicles make up roughly half of retail car and light truck sales. This change in prices will have an affect. At the current time it is unknown how much the change will change the market.

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