STUDY: Used car prices reached all-time high in September
New car sales have been in a downward spiral for over a year now, and the big beneficiaries appear to be used cars (and repair shops). A study by Manheim Consulting shows that the company's Used Vehicle Value Index has risen to a record high of 118.5 in the month of September, up 1.8% versus August. That's the ninth straight increase this year, as Manheim's index has steamrolled northward by 6.9% over the past 12 months.
New car sales have risen in part because many car buyers have decided to save money by buying used vehicles instead of new models, shrinking the supply of used vehicles on the market. And since fewer customers are buying new cars, dealers are left with fewer trade-ins. The month of September was especially impactful because many of the car-buyers who did buy new cars and trucks used Cash for Clunkers, and all of those vehicles ended up at the neighborhood crusher, not the used car lot.
Manheim's report also shows that both new and used vehicle inventories are down, which explains why new car incentives have been sliding as well. And with fewer incentives on new vehicles, used vehicles become a more attractive option, except there aren't many pre-owned units on the market. Used vehicles are going to auction with higher overall miles as well, a trend that is to be expected with the lack of vehicles coming off leases. According to Manheim, in January, the average auction car had about 51,000 miles on the odometer. That number has steadily increased over the past nine months to the point where an average auction vehicle now has closer to 63,000 miles on it.
With few used cars on the market and those models that are left tending to be of the higher mileage variety, it makes some sense that some automakers are becoming bolded in their volume projections for next year. Head over to Manheim Consulting for more info on its used vehicle index.
[Source: Manheim Consulting | Image: Justin Sullivan/Getty]
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Reader Comments (Page 1 of 2)
PiCASSO 5:09PM (10/13/2009)
John McElroy, "I told you so... "
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Simonsays 5:19PM (10/13/2009)
Is it just or is the 1st sentence in the 2nd paragraph confusing? "new car sales have risen...." ????
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Ray 5:23PM (10/13/2009)
Didn't alot of people say that the incentives to trash a perfectly good running car would drive up the price and lower the availability of good used cars.....? Huh. Turned out they were right after all. Seems common sense was true.
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Big Mola 5:29PM (10/13/2009)
C4C affected the supply of used cars worth less than $4,000. What has caused the scarcity of used cars worth more than $4,000? Additionally, the average mileage of available used cars has RISEN, which oddly seems contradictory to the perceived effect of C4C.
Eric Bandholz 5:43PM (10/13/2009)
@Big Mola. Supply and demand basics. Remove supply and keep the demand the same and prices will go up. Your product is used autos. Artificially remove those autos from the supply (doesn't matter if it's $1k or $10k) and price will go up.
The average mileage going up refers to people keeping their cars longer before they sell them or trade them in (another sign that supply is lower for used cars).
m 5:46PM (10/13/2009)
Big Mola, C4C raised all used car prices.
Let's say I'm shopping for a 5k$ car. C4C comes along and there are fewer 4k$ cars out there, so the prices rise. Now what once was a 4k$ car is a 5k$ car. Do you think the 5k$ car I was looking at before stayed at 5k$? The nicer car is now the same price as the worse car? No. Not a chance. It's now a 6k$ car. And so on. And so on.
Ray 5:51PM (10/13/2009)
Who said they were worth less than 4k? The C4C program offered 4500 for any used car in running conditions, worth more or less didn't matter. It was a flat going rate and most people would rather take that 4500 and not have to deal with trying to sell the car on the market and just take that 4500 dollars. When you remove supply the price of what you have goes up, regardless of what the market value may be, in this case cars. The intent was to get the auto makers paid back for their vote, and sell cars. They didn't actually think about how it would affect the market overall. People like me who have a truck and would like to have a cheap second car to putter around in have less of a selection by both the governments stupid idea, (cars sales are going to continue to drop mark my words, unless they figure out another way to artificially influence the market again) and lazy stupid people that now have a car note that they are going to have possibly have trouble making. This was a bad idea from the start and the effects of this aren't going to be immediate.
doug 5:28PM (10/13/2009)
Used car prices keep getting higher and higher at the auctions. It is to the point where it makes little sense to buy a 2008/2009 used car because a new one can be cheaper!
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Gruv 5:46PM (10/13/2009)
I for one am thankful for the rich idiots who continue to buy new vehicles so I can purchase sweet $50,000+ performance cars for under 10 grand just a few years later. Thank you rich people who have more money than brains! :)
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okiedokie 6:29PM (10/13/2009)
The rich "idiots" used their dumbassness to make tons of monies. Then they bought new cars because they didn't want to sit on a seat with a few summers worth of ass sweat and few years of farts. Oh.. and don't forget the "stains" either.
So you say 40g is > farts and stains?
the rich dude is just laughing at you cus money is piss to them and they make you think your're so ceemart
Frank 6:58PM (10/13/2009)
HA HA HA HA HA HA Ha! Hey Gruv you get what you paid for.
Paul 5:48PM (10/13/2009)
I don't buy this data ONE BIT.
Anyone who looks at used car prices regularly in wholesale, retail or private sales knows darn well that:
a) You can get unreal bargains at fire-sale prices all day long
b) Many of those amazing bargains still sit on the market for months
I'm sorry, but I want to know the methodology and who is paying the bills for this study, because this smells incredibly fishy.
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Scott 5:54PM (10/13/2009)
What you people are forgetting is a couple of things...
1) In the crappy economy more people are looking to buy used cars instead of new cars for the obvious reasons, they are much cheaper on the surface. It has nothing to do with CFC because I highly doubt there is a big demand for used cars that get crappy gas mileage. Its just that more people are buying used and therefore people selling them arent as desperate to sell their cars by lowering the prices. Now the seller has an upper hand and can sell it for what they might be asking for it.
2) If you are financing a car, a used car price might end up actually being just as expensive as a new car. Ie a used car at 8-10% interest might be just as expensive as a new car at 0%, etc. Everyone knows used cars are financed at a higher APR than a new one. People sometimes dont look at the big picture when it comes to buying used vs new.. they sometimes just look at the price on the sticker instead of with interest.
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benzaholic 6:11PM (10/13/2009)
'Manheim's index has steamrolled'
Haha
Very funny.
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katshot 7:41AM (10/14/2009)
Damn, you beat me to it! ;-)
floppy 6:28PM (10/13/2009)
Hey is that a dealership in Patchogue, Long Island?
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Frank 7:37PM (10/13/2009)
Buying a used car is a crap shoot and it always has been. 7 come 11 and no warranty (that simple). The article should be about the Lease programs that are asking for a bigger down stroke. I wouldn't buy anything that GM Ford or Chrysler is producing right now. The electric car will be here soon. Today's bought vehicles are going to be yesterdays sushi. Nobody will want them when they see the Dynamics and performance of these new green cars.
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keep the change 8:59PM (10/13/2009)
Oy Vey. The new electric cars will go 50 miles with the headlights and air conditioner on and then conk out on the side of the road. Tow trucks will be fastest growing segment of the economy. Before you throw out the internal combustion engine next year, let those battery cars do something first. This ain't the nobel peace prize.
"Today's bought vehicles are going to be yesterdays sushi."
What the hell does that mean? lol. Are you suggesting a new car today will go back and time and change into raw fish?
Frank 9:35PM (10/13/2009)
Hey you don't have to like it. Shelf life is short for gasoline powered vehicles. Just like raw fish. You don't believe it's coming but take a look . . it is already here. and keep the change!
http://www.oncars.com/video/496/2011-Tesla-Model-S-Part-2-of-3-Pure-Electric
colin.walker 12:13AM (10/15/2009)
Great info how else may I receive your info?
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