As warmer weather takes hold (in areas of the country where that's a factor), used car prices are often in step with the climbing temperatures.
Not so this year, says the National Automobile Dealers Association, which produces a used car guide from data it gathers from vehicle auctions. This year prices paid by auto dealers (who then retail what they're able to pick up) have softened in all but one category -- passenger cars.
Terrence Wynne, director of editorial services for NADA Used Car Guide, blames a sluggish economy for much of the price softening. "The demand has slowed, especially for the new end side of the market and that contracting economy affects the dealer's ability to go in and buy at auction," he said. "They are tightening their purse strings as well."
Among the highest declines in the first quarter were pickup trucks, average prices fell 3.3 percent from the previous quarter. Crossover prices fell 2.7 percent on average and prices for SUVs fell by 2.6 percent.
Vans commanded slightly less than in the previous quarter, just 0.3 percent.
The modest climb in prices for passenger cars -- 0.4 percent -- may be attributed to demand for more fuel-efficient vehicles, Wynne noted.
And as demand affects pricing, so does supply, which in the case of passenger cars is a function of how many vehicles left rental fleets.
"There's a natural volume cycle that factors in the prior year and prior three year sales," Wynne said.
As consumers gravitate toward more fuel-efficient vehicles, how are hybrids faring?
Wynne said an increase in the availability of used hybrids has helped ease what began as a premium priced category. "They were the latest and greatest but now that there's an increase in the used supply, some of that pricing has modified. But with the cost of energy, there's certainly as much or more demand now than in the past."
The latest softening of used car prices is reminiscent of the most recent slump, which occurred in 2002 and lasted about a year.
Wynne said he expects to see a continued softening of prices, "for about the next year."
After that, "we'll probably cycle out of it and see some price strength return to the market."
Wynne does say he doesn't expect the current downturn in used car prices to be as deep as it was in 2002.
"We had a whole slew of other issues, including 9/11 to contend with. The pricing behavior was the same, but I just don't think it's going to be as deep."
For consumers eyeing a used vehicle as their next automotive purchase, NADA, through its NADA Guides (www.nadaguides.com) has put together strategies for locating and pricing used vehicles, plus tips on how to evaluate the condition of a pre-owned car or truck.
Here are some to keep in mind:
- Starting from the exterior, stand at the front and rear of the car, looking down each side to see if things are straight. Notice sagging or rippling areas, uneven lines, or uneven body moldings and crooked trim, and you may be dealing with a car or truck that's had some bodywork done. Also check out openings around the doors, hood and trunk for space that's uniform in size. Fresh rust proofing underneath may be a sign of recent repairs.
- Open and shut doors to check for smoothness. Do the fasteners align or appear to be readjusted? Make sure doors seal well when they're closed to prevent wind from entering the vehicle.
- Check all the vehicle's lights (turn signals included) to ensure they're in good working order. And don't forget things like mirror controls, trunk and fuel-door releases, even cup holders. They can make a big difference to your ultimate enjoyment of the vehicle.
- Inside the vehicle, the condition of carpets and mats is an important first step. Also key is sitting in the driver's seat to assess comfort, ability to reach controls, and visibility. From the passenger seat, you'll get a feel for how easy it is for your passengers (or you) to enter and exit the vehicle.
- Finally, check out the engine bay. Are there fresh signs of shiny oil or other wet spots that might indicate an oil or fluid leak (check under the car or move it out of the parking spot)? Be sure to check for cracks in the belts and hoses, too. Also take time to check out the condition of the battery, exhaust, fluid levels, how the vehicle sounds while idling -- any unusual engine noises could mean a sign of serious problems (purring is preferred).
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