Archive for category New Car Price
Why Are Used Car Prices So High?
Posted by in New Car Price on November 6, 2011
Used car prices are so high that consumers who are considering buying a three-year old vehicle may find it more sensible to buy something new instead. The problem stems from a very weak new car market that followed a general economic collapse that took place beginning in September 2008.
That collapse saw Lehman Brothers shuttered and its assets liquidated. Several more financial institutions failed or were rescued through emergency buy outs. Immediately, consumers began to pull back on their purchases including leased cars. Today, the number of leased cars being returned by lessees has shrunk, with about 30 percent deciding to buy out their leased cars at discounted prices.
Used Inventory
A shrunken inventory of used cars has pushed up prices for all used cars from late model vehicles that are only one or two years old to much older vehicles with high mileage and in fair condition at best.
In a September 2011 report on the state of used car industry — The Lehman Time Bomb — Automotive News noted that prices for some used cars are very close to what people are paying for a new car. That publication gave an example of a Chevrolet Malibu which, after three years of ownership, is priced just $2,000 less than a new Malibu.
Ongoing Problem
The problem of elevated used car prices may continue for at least the next three years unless the economy begins to rebound. By 2014, the number of leased cars and traded-in vehicles should grow substantially, but perhaps not enough to offset continued strong demand. As long as demand outstrips supply, then used car prices will remain inflated.
If you are in the market for a used car, there are websites available that can give you pricing information for a vehicle at no charge to you. For example, Kelley Blue Book is one such site and offers four questions on the home page of its website. The second question — what should I pay for a used car? — should be selected and the second choice, I want a certified pre-owned car, selected. This particular selection is especially helpful for the buyer who wants to get a vehicle through a used car dealer and to receive a warranty for their purchase. Those prices will generally be higher than what you pay to a private party, but you should end up with a car that is in very good working order along with a manufacturer’s guarantee.
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