Used Cars to Become More Affordable

Here’s good news for cash-strapped consumers. Used-car values are expected to fall to their lowest levels in nearly six years, according to the valuation experts at ALG in Santa Barbara, Calif. Prices reached record highs following the economic collapse in late 2008 as pre-owned inventory levels dwindled because of depressed new-car sales, a rollback in leasing and fewer sales to rental-car fleets. In addition, nearly 700,000 used cars were taken out of the market by the “cash for clunkers” program in 2009. “The continued strength of new-car sales is increasing the availability of high-quality used cars as shoppers continue to trade in their old vehicles,” says ALG president Larry Dominique. “Additionally, because of the popularity of short-term leases, the drought of used-car supply is starting to subside, and we expect a steady decline in used-vehicle prices.” By 2017, ALG forecasts the average new vehicle will retain 49.4 percent of its value after three years, compared to the 54.6 percent retention recorded for pre-owned models through June 2014.