By on May 8, 2011

There is one positive aspect to the Japanese tsunami: It seems to lift resale values. Manheim’s Used Vehicle Value Index just rose to another record in April, says Automotive News [sub]. Manheim has been keeping track of used car prices since 1995. Pushed by tighter supplies and higher demand, the index climbed to 126.6 last month, up from 124.2 in March and 120.7 in April 2010.

Used-vehicle sales by franchised and independent dealers rose to 7,158,917 units in the first four months of 2011, up 10 percent from last year. Sales rose 14 percent to 2,650,619 in April.

Fox News says that “used car prices are rising, at what some industry analysts say is an extreme rate. Everything from the recession, to the earthquake in Japan is being blamed for what some are calling the biggest shortage of late model used cars, in 20 years.”

It’s a global trend.

In Japan, “used cars are selling at extremely high prices as people in quake-stricken areas rush to buy vehicles priced at 500,000 yen or less as a temporary means of transport,” writes The Nikkei [sub].

In Australia, one of the recipients of barely used, meticulously kept 3 year old right-hand drive used cars from Japan, “the Japanese earthquake and subsequent tsunami that devastated Japan in March has caused another disaster — to the used-car market,” reports The Republic. “Prices for used cars, especially small, fuel-efficient models, have risen dramatically in response to many factors, including a shortage of new cars coming from the island nation as automakers there struggle to restart production.”

In the UK, where new car sales sink lower by the month, demand (and prices) for used luxury cars is up, reports the Royal Auto Club.

 

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28 Comments on “Used Car Prices: You Are Sitting In A Goldmine...”


  • avatar
    Omnifan

    I believe it. My four year old Buick is worth today what I paid for it used two years ago. Wow!

    • 0 avatar
      highdesertcat

      The ‘used car’ market has been excellent since before 2008. After buying our 2008 Highlander, my wife’s 1992 Towncar sold within 1 day of placing the ad, and for more than we anticipated by $750 OVER KBB’s high.

      After buying my 2011 Tundra in January, I sold my 2006 F150 within one day of placing the ad, for $1000 more than KBB’s high. At that time I also decided to sell-whole or part-out the six other old vehicles of ours we had parked on the property and all of them sold within a week. They all ran so instead of parting them out I told the buyers they could have the whole thing if they bought the engine and transmission.

      My 1988 Silverado took two weeks to sell, but it sold and is still used daily by a Mexican national who works in this area. The used car market really is more than good. It is GREAT!

      • 0 avatar
        ciddyguy

        If what you are saying is true, then I have hopes of accomplishing my dream and will try to time the selling of my 1992 Ranger as close to when I go to purchase, assuming things are still a going concern.

      • 0 avatar
        highdesertcat

        ciddyguy, it is true for MY area. I can’t speak for the whole USA. Remember I live in ‘High and Lonesome’, not a densely populated area where the pickings are a-plenty. But if you play it right, I have no doubt you will sell your Ranger. I recommend Edmunds, Intellichoice and KBB to get a feel of what you should ask for it. Our Towncar and F150 were in excellent shape. I went to Discount Tire and had them slap 4 new Michelins on each vehicle before I sold it, and I handed over all the maintenance and repair records to the buyer. Makes a world of difference. The Towncar went to a young airman at the nearby Airbase. We see it quite often either on the base or in a nearby town. The F150 was sold to a guy who lives in Las Cruces, NM, but has relatives in my area. He read the ad while visiting his family and called. Sold that same day. I admit some trepidation when the guy wrote me out a check for the amount, and I took my plates off. But all’s well that ends well. And it ended well. His check cleared.

      • 0 avatar
        ciddyguy

        According to KBB, the Ranger for my zip (Seattle area) still says 3,225 in fair shape for private party, 3,625 for suggested retail, again in fair shape and $1450 for trade in.

        This is for the top of the line STX supercab with trailer package, stock premium wheels, fog lights, cruise, aftermarket CD/MP3 player (no USB though but has the Aux jack), AC (doesn’t work but is fixable and needs to be converted), has a matching canopy and the interior is still quite decent.

        Has good exhaust, tires, runs great and is still fairly straight with good paint that’s not peeling or anything else and these trucks of this vintage of earlier still abound out this way, as are the later models, and add to that, Bronco II/Explorer sports and the Explorers.

      • 0 avatar
        highdesertcat

        ciddyguy, my sister lives in Kent-Desmoines and she sold her 2006 Mustang 4.6 GT – manual 5 speed – privately this past December and got a whole lot more cash money than what the Ford dealer offered her on paper as a trade-in for her 2011 Mustang automatic. I think your Ranger will sell. My advice is to get CASH or a CERTIFIED CHECK. It reduces anxiety. I got a check on Saturday for my F150 and had to wait until Monday to make the deposit for an out-of-state (Texas) bank. I was sweating it, since my distrust of people far outweighs any good thoughts I may have about people.

      • 0 avatar
        ciddyguy

        Definitely good to know!

        I’ll keep this in mind when I am in a position to do so, which I hope to be able to do this summer/fall and will watch the situation closely in the meantime.

  • avatar
    Educator(of teachers)Dan

    So glad I’m not one of those people who has to have a car “RIGHT NOW!”

  • avatar
    aristurtle

    Huh. Maybe I should dump my crappy quarter-million-mile Civic earlier than I’d planned and go motorcycle-only until the fall, and pick up something for the winter then.

  • avatar
    whynotaztec

    I work with several used car dealers in the boston area, lately they have been complaining of ridiculous pricing at the auctions, and of course especially for anything with a 4 cyl. But anyone can see it for themselves, the dealer next to me has a 2007 accord exv6 with 60k for 19 grand!

  • avatar
    lahru

    As an example of this situation, Enterprise Rental has their 20,000 mile rentals for sale at $2,000.00 more than last year.

    Specifically a 2010 Ford Focus SE the sold new for roughly $16,500.00 after rebates is now selling for $15,900.00 with 20,000 miles and the usual scratch and dent package from Enterprise

  • avatar
    mikey

    The local Manheims has been running an “open to the public” auction on Saturdays. Most of it is junk. Stuff the dealers didn’t want. I see the odd jewel,but not many.

    However the price people are bidding for seven, to ten year old cars is down right scary.

    If I needed to, I would sink cash into an old beater and buy some time. Give it six months to a year and the market might stabilize.

  • avatar
    don1967

    Sky-high resale values + dirt-cheap interest rates = golden leasing opportunity. Especially for business users, or those inclined to trade every 4 or 5 years.

  • avatar
    Steven Lang

    It’s a lot more than that.

    On the late model side the manufacturers produced very few lease and finance vehicles for the 2009 and 2010 model years. There is also the tsunami issue Bertel raised. The franchise dealers are trying to get all the late model vehicles possible BEFORE they even get to the auctions. The little that’s left is vehicles that everyone ignores when gas prices are high (full-sized pick-up’s, low feature content SUV’s, minivans,… and program vehicles with 60k+ miles)

    Rental car companies are also keeping there vehicles for approximately 18 months now on average. Twice the duration it was in 2008. Then you also have the repo side of the business declining by a bit (finally) and fewer auto related perks for larger companies.

    All of this leads to higher prices in the used car market. But this may end up becoming far worse due to the low levels of production we’ve had the last few years. If new car sales and lease/finance volume are any indication, we will probably hit the peak of used car prices during the 2013 tax season.

    Then again, anything can happen. But the metrics all point in that direction.

    On the older used car side ‘everybody’ is going after the same customers. Franchise dealers, used car superstores, even the mom & pop firms are aiming at the buy-here pay-here customers. They pay the most over the course of time and prices for used cars clearly reflect that.

    As a personal example, back in 2007 I was clearing nearly $1700 a vehicle on cash deals. I was a cash only dealer back then. Today I can clear more. But it takes me anywhere from 12 months to 30 months to see that profit and there is no guarantee I will ever get it. I’m lucky to have an older clientele. But the stress level and BS I deal with now is much greater than it was back in the day.

    I think this business will eventually go to a consolidated model where a few manufacturers and dealer networks will be able to move the market. Manheim will need a very different business model than the one they have now if they plan on becoming one of those market movers. It’s the only firm I have seen in this business where the auctions compete against each other on the same day (and sometimes within 20 miles of each other) while taking away each other’s core accounts. Meanwhile the competition frequently performs their sales on days where Manheim doesn’t even run.

    • 0 avatar
      thats one fast cat

      Steve:
      Excellent analysis as always. A question, though.
      It seems like the value of late model luxury cars continues to fall at the same (alarming) pace. The one that always surprise me the most are the 4-6 year old German top line sedans – S-class, 7′s and A8s. Am I the only one that is constantly mystified how a 100+K car can go for 35% of MSRP about 5 years out? The descent rate seems to be larger as a percentage than the midlevel luxury cars — E’s, 5′s and A6′s.
      Will this sudden interest in used slow the descent of these cars, or is the market just not interested in shelling out for a car that requires 2-3K/yr in maintenance, excluding the feeding of high test and synthetics?

      • 0 avatar
        Mathias

        It probably won’t change much.
        The point of an S class is either as a company vehicle for Very Expensive Persons.. or to show you’ve got dough.

        The cachet of a 5-year-old S — or A8 or 750 — is just not there, at least not beyond an E class or similar. What IS there are astronomical repair costs.

        I’ve heard it said that if you can’t afford a high-end German car new, you can’t afford it.

  • avatar
    Zackman

    Wow. I wonder how much my 2004 Impala with 81K miles is worth and if I should buy a new one! Thinking…mulling…hmmm…A friend who bought my last two vehicles was asking me if I was thinking about selling anything recently! I must research this!

    By the way – that photo above – LOVE IT! Those were everywhere back in the day, next to every Chevy dealer in the nation!

  • avatar
    ciddyguy

    Yeah, I’ve noticed in recent months that used car prices have kind of gone up around here, even one that’s coming up on 20 years old next year.

    I drive a 1992 Ford Ranger and according to Kelly Blue Book, in fair condition as my truck is in (runs well, some minor body issues, paint still good and the AC doesn’t work [needs recharging/conversion but seems OK otherwise], interior decent although the driver’s seatback angle mechanism is stripped out, has premium wheels and has good exhaust and tires) still commands upwards of 3,225 via private party with suggested retail around 3,625 or trade in at around 1,450, also in fair condition.

    If this is indeed true, I have my down payment, assuming I can obtain a loan for a NEW car as it seems that if I buy gently used, even CPO, they will more than likely go for almost as much as new – and this is for small 4 cyl subcompacts and one in particular I want, the little Fiat.

  • avatar
    geozinger

    Just a few observations: In my neck of the woods (SWMI), I’m still seeing dealers running ads about how they have a truckload of off lease Grand Caravans and Journeys they’re blowing out the doors for $12995. It’s not just Mopars, it’s other cars too.

    OTOH, my Buick GMC (formerly Pontiac) dealer sent me a post card yesterday wanting to know if I would sell my 2009 G6 back to them, but I routinely see dozens of G6′s for sale around here. Mine is a loaded Ecotec/6 speed but I don’t know how well that would stack up against the dozens of V6 G6′s that are for sale on lots and privately locally. I’d have to research this.

    Where I’m really noticing a difference is the low low end. My daughter’s roomate’s car just died. She has little credit history, and little money for this purchase. We’ve been looking at cheap cars, but the $1500 car market has evaporated or gone up to the $2500 level instead. Only one buy here pay here lot will talk to her, and they want something like a 24% interest rate for a 5 year old Cobalt! I’m checking with my sources, as my daughter is getting tired of ferrying her around, and I don’t think the roomate likes it too much, either.

    • 0 avatar
      ajla

      Mine is a loaded Ecotec/6 speed but I don’t know how well that would stack up against the dozens of V6 G6′s that are for sale on lots and privately locally. I’d have to research this.

      You’ve got a pretty rare (and my personal favorite) G6 then. I’m guessing it will stack up pretty well against the legions of 3500-powered Pontiacs.

      • 0 avatar
        geozinger

        I’m of two minds on this idea of possibly trading in the G6.

        One is do it and see how much I can put against a new Equinox or Terrain. Both of those are what my wife seems to want, as she drives the G6 daily.

        The other idea is to keep the G6 because I don’t think the high gasoline price roller coaster ride is over yet. We get 24 MPG in town (very short drives, her office is three miles from the house), and no way is ANY SUV going to beat that kind of in town mileage.

        BTW, the Ecotec / 6 speed combo is pretty popular around here, in G6′s and Malibus.

  • avatar
    krhodes1

    I did MUCH better than I expected selling my 2008 Saab 9-3 a couple weeks ago. Had to move it in preparation for taking delivery of my ’11 328iT in a few months. I think that it being a fairly rare car – 6spd manual Sport Combi – helped a LOT. The folks I sold it to would not even consider an automatic. Cost me ~$4.5K in depreciation to drive it for 25 months and 34K miles, which as new cars go you can’t complain about too loudly. Also got $5K more than the BMW offered in trade, but I beat them up pretty good on the price of the new car so the trade-in low-ball was completely expected.

    The lack of those 2-3yo off-lease vehicles from Saab is definitely affecting the market right now. The leftover 2010s are pretty much gone, dealers are trying to get better money for the ’11s, and there are darned few used ones around for sale.

    Saabs current ills do not seem to be reaching the general public, but I have to admit that back-of-my-mind fears of Saab not making it are what caused me to sell the car NOW rather than wait until closer to the delivery of the new one. I am doing European delivery in August, so it won’t reach the US until late September. Bought a cheap Volvo 945 to tide me over, I will keep it as a winter beater/Home Depot hauler.

    • 0 avatar

      If you don’t mind me asking, how much did you get for it and was it a 2.0 T? I have a 2008 9-3 Aero V6 SportCombi that I want to sell so that I can buy something more efficient before the gas prices get higher.

      Thanks!

  • avatar
    Bill Wade

    I put a 99 big block Suburban on Craigslist for $6500. It sold instantly. I’m utterly amazed the gas hog went that fast at that price.

  • avatar
    George B

    Someone is leaving notes on beater type trucks in my suburban Dallas neighborhood asking if the owner wants to sell. Not sure if it’s more profitable to fix up trucks or if this guy’s skill set is limited to the front engine RWD configuration. Either way, it looks like someone is trying to make money reselling the type of vehicles cash for clunkers set out to destroy. Still pissed that my tax money was used to destroy so many useful trucks.

  • avatar
    lilpoindexter

    I was hoping the gas prices would drastically drop the prices of newer Grand Marquis, but it really hasn’t changed the price up or down much, if at all.

    The CNG Crown Vics here in the So Cal area sell for about $2000 more than KBB because you can ride in the car pool lane solo.

  • avatar

    Watching Craigslist and AutoTrader in my area I think my no frills 2008 Legacy has actually appreciated since I bought it last year. After heavy haggling I got it for $15.5k and the cheapest comp I can find now is at 18k.

  • avatar
    Subifreak

    I wonder what my 2005 Lexus ES 330 is worth with just over 70k miles…?


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