NADA Used Car Guide:
Used vehicle supply growing; prices to drop
The used vehicle supply is swelling and should reach pre-recession levels by 2017, said Jonathan Banks, executive analyst for NADA Used Car Guide.
The used car market has enjoyed high demand and short supply after the recession, causing used car prices to reach all-time highs, Banks said. As the automotive market continues to recover, used car prices will drop. The question is: by how much and when?
A burgeoning off-lease supply of used vehicles will drive late model [five years or newer] volume up 8 percent this year, Banks said. Late-model supply will reach pre-recession levels in 2017, but overall supply will lag by a few years. Off-lease cars will be dominated by compact cars and utilities, and midsize cars and utilities a reversal of the pre-recession trend.
The combination of declining used prices and recent finance trends could create negative equity for some consumers.Download Bulletin PDF