Used car prices hit record high in May
With several factors compounding the problem of limited used vehicles simultaneously, used car prices soared to record highs last month.
Shopped for a new-to-you used car lately? Notice the limited selection or the higher than you remembered pricing?
According to a report by Manheim Consulting, a branch of Manheim Auctions, the average price for used car categories in the U.S. last month soared by as much as 20.1 percent over the same month last year.
The Manheim Used Vehicle Value Index cites several reasons for the jump, starting with reduced new car availability due to the natural disasters in Japan, which then reduced the number of used cars made available via trade-in. Higher gas prices and a shift in consumer demand also played a role, along with potential residual affects of a depleted used car market in the aftermath of Cash for Clunkers.
The net result is a jump in the value of used compact cars of 20.1 percent, with midsize cars commanding 14.4 percent more than a year ago, while luxury cars saw a negligible gain of 1.1 percent, leaving pickups, SUV/CUVs and vans to drop 4.0, 5.8 and 1.3 percent, respectively. The total change in transaction prices of used cars in May 2011 compared to May 2010 was a jump of 5.6 percent, a record for the Manheim index.
As a result of limited new car sales, auctions are seeing dramatically increased transactions prices as supply remains limited, with the overall increase topping 20 percent. Others connected to the auction process such as fleet owners are enjoying higher selling prices as a result, including used rental cars that traditionally suffer significant value drops due to their history.
Manheim Consulting expects the upward trend of used car pricing to continue for at least several months.
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