The good news for new-car shoppers is that resale values remain strong, meaning they’ll get more money for their existing rides in trade. The bad news, however, goes out to used-car shoppers, who continue to face sky-high prices, though they may be softening. According to the National Automobile Dealers Association in Orlando, Fla., the average used car (up to eight years old) will cost $14,375 this year, which is down by just 0.8% from $14,500 in 2012.
This is the first drop - however modest - in used car values recorded since the economy crashed in 2008, according to NADA figures. Pre-owned vehicle prices subsequently skyrocketed by a stratospheric 32 percent over a three-year period. Still, don’t expect the bottom to fall out of the market any time soon.
Jonathan Banks, executive automotive analyst of the NADA Used Car Guide, says used-vehicle prices will remain largely at their lofty levels because of looser lending standards, recovery in the housing and construction markets, a gradual decrease in unemployment levels, an increase in supply from booming new-car sales and pent-up demand among consumers who only purchase used models. “As job growth continues to progressively improve, used-vehicle intenders will gradually replace their current vehicles with newer, pre-owned ones, thereby helping to compensate for the loss of new-vehicle substitute demand,” Banks adds.
Although high fuel prices would logically make smaller and more efficient models in greater demand, and thus lead to higher prices, NADA says that used full-size pickups are commanding premium prices these days, with depreciation at about half the rate of the average auto, due in part to the healthier housing and construction sectors.
As always, careful shoppers can be expected to garner the best deals in used cars no matter what size or type they favor. And according to CarGurus.com in Cambridge, Mass., used car prices can vary widely depending on where you live and/or shop. The automotive website’s data shows that used-vehicle prices are the lowest in Miami, Fla., where they’re 6.6 percent less expensive than the national average. By contrast, the costliest city in which to shop for a used car is Jackson Miss., where prices are running 9 percent above average. On a $15,000 used car, that 15.6 percentage swing can represent as much as a $2,340 difference solely based on geography.
“Prices can vary substantially from city to city, and depending on where you live, it may pay to look beyond your ZIP code to find greater savings,” says Langley Steinert, founder and CEO of CarGurus.
In fact, dealers located within a 50-mile radius of a major city generally offer lower prices on equivalent models than their counterparts located in distant suburbs and rural areas. A previous CarGurus survey found that on average, city dwellers paid $345 less for a used car at local dealerships than did those shopping at suburban and rural lots in the same state.
Check out the accompanying lists of the 10 most- and least-affordable cities in which to buy a used car.