Used Car Prices Hold Up in Strong New-Vehicle Market
Used cars and light trucks, especially late-model vehicles in the Compact Cars, Large Pickups, SUVs, and even Midsize Cars segments, continued to be robust sellers through the first 8 months of 2015, based on used-vehicle sales data collected from dealerships by the Power Information Network® (PIN) from J.D. Power.
This year, the average used car or truck was just 4.3 years old vs. 4.4 years old a year ago and had an average of 853 fewer miles on the odometer (51,554 miles vs. 52,407 miles), PIN data indicates. In addition, during the first 8 months of this year, a used vehicle averaged 46 days on a dealer lot before being sold—up only 1 day from 45 days a year ago.
What’s more significant is that used-vehicle transaction prices remained relatively strong in the first 8 months of 2015, even with a healthy inventory of off-lease vehicles and trade-ins on dealer lots due to higher demand for new vehicles this year. The average used-vehicle transaction price from January through August 2015 increased by 2.6% (+$504) to $20,057, from an average of $19,553 in the same period of 2014.
“We see strength in used-vehicle prices, and a contributor to that is that we see more used vehicles being drawn from maturing leases, often after only three or four years. By virtue of the fact that these off-lease vehicles are younger with lower mileage, they command higher prices,” said Joe Derkos, director of consulting and analytics at J.D. Power.
Currently, off-lease models are adding to growing sales of certified pre-owned (CPO) vehicles which enhance consumer acceptance and loyalty in regard to the quality of used vehicles sales. “We see a growth trend in the CPO end of the market,” Derkos said. “More mature leases are coming back, and they are in good condition and don’t accrue extra mileage, making them prime candidates for certification. Also, automakers and dealers are doing a better job in offering a CPO sales experience that rivals that experienced by new-vehicle buyers.”
A few more findings from PIN’s used-vehicle sales data analysis:
- Among all vehicle segments, used Midsize Pickups remained on dealer lots before being sold the shortest average number of days this year—33 days vs. 32 days in 2014, followed by used Compact Premium Sporty Cars—which averaged 41 days vs. 42 a year ago.
- More consumers age 56 and above opted for used vehicles this year than in 2014. Segments that saw major gains from this buyer demographic included: Compact Sporty Cars (+2.1%); Midsize Pickups (+1.1%); Compact Premium SUVs (+1.6%); and Midsize Premium SUVs (+1.3%).
- A majority of the used cars and trucks delivered were cash purchases, although the percentage of used-vehicle leases edged up to 4.5% from 3.4% in 2014.
- Transaction prices continue to increase for used models. The highest average transaction price increase this year at the segment level was for a used Large SUV, up 8.7% ($2,324) to $29,013 from $26,689 a year ago.
- Among car segments, the transaction price of a Midsize Premium Sporty Car has increased by an average of 8.4% ($3,668) to $47,477 from $43,809.
- Used Large Pickups also retain their value. An average used Large Pickup sold for $26,134, which was up 6.7% ($1,646) from an average $24,488 in 2014.
- Compact SUVs are one of the most popular segments in both the new- and used-vehicle market. Yet, used Compact SUV transaction prices have increased by less than the differences in many other popular segments—the average transaction price was up just 1.8% ($327) to $18,387 vs. $18,060 a year ago.
- Midsize Cars may be models for used-vehicle shoppers to consider since the average Midsize Car transaction price actually dropped this year by $108, to $14,657 from $14,765 in 2014, based on PIN data.
- Other segments for consumers to consider that have seen declines in the average used-vehicle transaction price this year vs. the same period in 2014 include: Small SUVs; Small Cars; Compact Sporty Cars; and Compact Cars.