Used Cars Making a Comeback
Since 2005 the used cars market has had it rough. As the economy struggled, used car dealers struggled right along with it. Uncertainty around job security and a general decrease in access to credit (thanks in large part to the banking collapse) kept buyers’ money in their pockets. But over the last couple of years the economy has found it’s footing and the used car market is one of the first industries to feel the effects of the recovery.
New Study Offers Insight into 2014 Used Car Market
A recent study conducted by Manheim Consulting has revealed some interesting facts concerning the current state of the used car market. More than just heralding a return to pre-2006 business levels, the study also points to some useful data regarding last year’s sales data from franchised used car dealerships.
Among the more interesting facts in the study:
- Used vehicles are selling for between $14,000 and $15,000 on average
- 15.6 Million used cars sold in 2013
- 16 Million cars expected to sell in 2014
- 2.1 Million Certified Pre-Owned cars sold
- 4 Million Certified Pre-Owned cars expected to sell in 2014
As one of the leading vehicle remarketing services and wholesale auction operations in the U.S., Manheim Consulting is reporting these numbers firsthand. The study suggests that the certified used numbers will continue to grow due largely to buyers who previously bought new cars switching to Certified Pre-Owned vehicles. The increase in demand will be matched by increased supply as leased vehicles move into the program throughout the year.
Used Car Sales Boosted by Amazing Auto Loan Rates
Manheim Consulting’s report points to improved access to credit and a lowered unemployment rate as two of the major motivating factors in this upswing in car sales. It’s more than just access to credit though, the rates for auto loans are better than they have been in recent years. The report states that auto loan interest rates have been between 7 and 8 percent. Sub-prime borrows can expect rates between 12 and 19 percent. Certified Pre-Owned vehicle buyers saw the best auto loan rates in 2013 with average interest rates between 4 and 5 percent.
Average Auto Loan Interest Rates:
- Standard Auto Loan: 7-8%
- Sub-Prime Auto Loans: 12-19%
- Certified Pre-Owned Auto Loans: 4-5%
Boom and Bust?
Last year’s numbers were the best we’ve seen in a while and while the used car market is expected to continue to grow over the short term, another study suggests that the market may be headed for a big bust. This study was a joint effort between IHS Automotive and Groupe Futuribles and drew a dim conclusion: The world is headed for a large-scale impassable traffic jam.
It’s not a secret. The problem has been on the horizon for some time and it’s beginning to come to life worldwide. Drivers in China and Brazil are really beginning to see the pains of living in cities that aren’t prepared for the massive influx in vehicles. Most existing cities weren’t planned to cope with the heavy traffic that has been growing every year since the mid-90s. As a result, this study points out that most cities will reach a point where there is nothing they’ll be able to do to alleviate the congestion. The city will have been built up to a point where further construction will be impossible.
Ford Chairman Bill Ford has been concerned with this issue as well. At the 2013 Mobile World Congress, which took place in Spain, Ford stated, “If we do nothing, we face the prospect of ‘global gridlock’, a never-ending traffic jam that wastes time, energy and resources and even compromises the flow of commerce and health care.”
Of course, because it’s not an immediate threat, the markets are ignoring these concerns and so too are the buyers. For that reason, the used car market is expected to stay strong for the near future.
Used Car Market Up and Downs
For now, the global traffic jam doesn’t seem to be a concern. Different sources have different perspectives, but the bottom line is that right now is a great time to buy a used car and specifically, a Certified Pre-Owned car.
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