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Used Cars to Get Cheaper

Used_car_dealers_on_the_Industrial_Estate_-_geograph.org.uk_-_766208Used-car prices may be lower in the coming years as the number of used cars in the market increases.

According to statistics from Manheim, a large company specializing in used-car auctions, there are only 1.7 million vehicles in 2013 that exited from their leases to the used-car market.

These are the vehicles that were leased in 2010 or 2011 when people were still recovering from the recession and credit standards were tight. Such low supply of used cars causes the prices to stay high.

In Motley Fool’s report, only 19 percent of U.S. retail new-vehicle sales were leased in 2010 and 20 percent in 2011.

But the number has started rising and this could mean that used-car prices will also begin to go down.

As the economy started improving in 2012, new-vehicle sales grew by 13 percent and 7.6 percent in 2013.

As this implies that used-car supplies are increasing, Manheim predicts that the number will rise to 2.1 million in 2014 and 3 million in 2016.

These may all sound good to buyers, but not so to automakers. Expensive used cars lead many buyers to buy a new vehicle instead since the latter costs just a few thousand dollars more.

One thing automakers can do to cushion the negative impact of lower used-car prices is offer more certified pre-owned vehicles—those that come with extended warranties. This help keep used-car prices strong while the certifications give buyers peace of mind about used-car shopping.

Photo credit: Eric Jones / Wikemedia Commons / CC BY-SA 2.0




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