Used car prices reach record level in 2014

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It isn’t just auction sales and collector car values that are going up – even the used car market is pushing strong numbers. A report from Edmunds put the average price of a used car in 2014 at $16,800, which is a record, and up 5.7 percent from 2013.

It also found 1-year-old and 4-year-old cars showed gains at or near the average, but some vintages showed superheated gains: the average price increase for a 2006 car was up 8.8 percent; at 11 years old it gained 14.9 percent; and at 16 years old prices increased 18.4 percent.

Edmunds and other analysts outline a few causes for the uptick. The certified pre-owned market pours clean off-lease vehicles into the stream and clocked 2.3 million sales last year, 21 percent of the used car market. With 27 percent of the overall new car market last year coming from leases – and 53 percent in the luxury segment – as that corner grows it will serve up even more lightly used cars. The boosted prices for much older cars is suspected to come from the expansion in subprime lending and lower gas prices.

The situation could soften up in a few years, but the immediate benefit for new car buyers is that the strong residuals and prices should get you some “reasonable offers” and bargaining power with your trade-in.


 

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