Deflation Collides with Used Car Prices

Used car prices are way up … . Car-shopping site found that the prices of used cars are up nearly 8% (that’s an average increase of $1,300 per car) in the second quarter compared with a year earlier. The average used car now costs $18,800.

Now, used car prices are falling for the first time since 2008. Analysts blame an oversupply.

Read this excerpt from an April 25 CNBC article:

According to "NADA Used Car Guide," used car prices will fall 5 to 6 percent this year. And while some may be tempted to draw from that negative conclusions about the U.S. economy, NADA executive analyst Jonathan Banks explains that the drop is reflective of rising supply, rather than falling demand.
"2016 marks the first year where we have a material increase in used supply," Banks said [April 22] on CNBC's "Trading Nation."
He explains that recently, record-high used car prices have been spurred by a lack of used car supply, which in turn was caused by low new vehicle sales as a result of the recession. That trend is now reversing.
The supply of used cars "is driven by 2013 lease returns coming back into the market, which represents about an 800,000 increase compared to 2015," Banks said.

You can read the entire article by following the link below: