Over the past few months, since the Cash For Clunkers program ended, used car prices have been on the rise due to a reduced stock of used cars in the marketplace. Wholesale and retail buyers alike have been competing for less number of cars which has caused used car prices to rise. Some sales staff estimate that used cars got to about $2,000 more than last year.
The Cash For Clunkers program had a double effect: it drastically reduced new inventory stock from increased sales and took just as many used cars off the road. The program was primarily aimed at old, gas-guzzling, inefficient vehicles but many of the vehicles destroyed under the program could have been resold on the used car market.
Shortage in supply means an increase in demand among dealers, or anyone looking to buy used, and prices increase as a result. “There’s a lot of people out there looking for more used cars than new cars right now, which definitely drives the used car prices up,” said Lori Sisulak, general manager at Ike Honda in Marion.
However, there are signs now that used car prices are falling. Manheim reported that used car prices reached a plateau in the last week of September. Since then used cars prices and conversion rates are falling at auctions. Going forward this provides better opportunities for buyers than there has been for some time. The same scenario is reflected in both live and online auction marketplaces. Online supermarket Autoquake.com’s co-founder Fredrik Skantze says that the values of used cars are falling fast. “After months of rising prices, we’re seeing signs that the used car bubble has burst” he said. “Values at auction have begun to slide and our prices are lower than they were a month ago”.
Whatever the current situation, market forces, through supply and demand, will ensure that used car prices don’t stay high forever.