An increase in used-vehicle prices reflects a bad, but recovering economy

These days buying a used-vehicle is going to cost you more.

According to an article in Automotive News, the average wholesale price of a used vehicle in June was $10,167, which was the first time since 2008 that the monthly average price exceeded $10,000.

The chief economist at auto dealer auction house Manheim, Tom Webb, said that the wholesale used-vehicle price increases are a result of a shortage of vehicles at auto auctions in the beginning of 2009.

One industry analyst said the prices for used vehicles are rising due to “universally bad” causes: fewer retired rental cars and fewer trade-ins due to weak new-car sales.

For consumers, however, the higher prices could be an early sign of a perk in the economy. The strong price increases are also “universally good” because they give consumers more equity in their trade-ins, Webb said. Buyers and sellers of wholesale used vehicles are also benefiting from the rising prices.

Vehicles auctioned by dealers and those retired from rental fleets both declined more than 15% through June, Webb said.

"The changes, given the normal stability in this industry, were big," Webb said. "They definitely had an impact on pricing in the wholesale market."

-- Kelsey Ramos

Photo: Ken Hively, Los Angeles Times

Comments

[Sten]

or are there just more expensive cars in the mix?

[gloighlin42]

Tom Webb must be a blithering idiot if he expects anyone with even a trace of a brain to buy into this! The truth is used car wholesale prices are DOWN considerablly in the past 6 months. There is no demand for used automobilles that would cause a rise in prices rise. Maybe Tom Webb hasn't heard but in the REAL world people are losing jobs at an alarming rate, not to mention the economy is close to complete collaspe.

[diego pineda]

I agree with gio42, perhaps the only reason
That "rise" which equals $10,000 average
Price can be attributed to people who need
Money and are selling their high priced
vehicle.

[cheng]

So please teach me how to interpret the next price move base on your confusing half-cooked theory that increased used car price "reflects a bad, but recovering economy":
1) if used car price goes up further next month, does it means the economy is recovering even more? or is the economy is getting worse?
2) If a dramatic increase occurs next month, should we treat this as a welcome news or no?
3) How about the reverse?
If one thinks through what the article says, it seems that the hypothesis could fit either way.

[one]

Recovering economy? Haahahahahaa.... Maybe in your fairy tale dreams. As of now people are loosing jobs and other folks are getting less money for their work or are forced to go on unpaid holidays. Many folks are defaulting on their credit card and credit line loans ...etc. All these are just the perfect pretext for another big plunge. The second wave of the stock market crash is coming and until the DOW doesn't reach about 4000 which will be the true bottom, there will be no real recovery. So don't even try to attempt to create another inflated bubble again. People are hopefully learning, thus not buying into this anymore.

[Mark]

This is really hysterical....another well planted piece of false marketing masquerading as real news. The LA times has really become a sad excuse for a paper....should we lead with another Michael Jackson story too?
No wonder this paper is going under....sad

[Carla]

I would like to see a breakdown by car make & model of used cars currently available as opposed to in 2008. I'm betting there are more high-end cars (Mercedes, BMW, Porche, etc.) in the mix now, and that is what is pushing the avg price up.

[RH Junley]

I live in Phoenix, and I know for sure one thing they should do is stop building new houses. Just like they should drastically reduce the amount of new cars. I also know of a lot of waaay upside-downers who refi'd, who have stopped making house payments, or will be soon. They are still driving around in the new cars they bought when they refi'd, which like diego said, they will be trading in soon.

[Ronbo]

There has been an increase in quality and reliability in the last five years, especially among American cars. It makes sense that this is reflected in rising used car values, over time these more reliable cars make up an increasing percentage of the market.

If a used Chevy used to be good for an average of 100K miles before major repairs, and the market perceives it to now be good for 120K miles, that makes a significant difference when its sold with 80K miles on the clock.

[JimWHenry]

For working trucks the rule is not based on the fuel efficieny. As long as it is manufactured before 2001 they all qualify
but cannot be older than 25 years old.

Jim Henry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info