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Used-car prices soar, slowing depreciation

By Jerry Hirsch, Los Angeles Times

LOS ANGELES ó Normally, the value of a new car plunges as it’s driven out of the dealership by its new owner.

But slumping auto sales and leases in recent years have changed that axiom by creating a shortage of late model year used cars, according to auto price information company Kelley Blue Book.

For 1- to 3-year-old used vehicles, the average price has increased from $15,000 in 2008 to more than $23,000 in 2011, an annual average increase of nearly 16 percent, Kelley analysts said.

They expect used car pricing to remain strong because it will take several years of strong new-car sales to replenish the shortage of used vehicles that is pushing prices up now.

“While depreciation typically affects a vehicle’s value most in the first two years of ownership, it will not be as pronounced as it would have been a few years ago when the used-car supply was still very high,” said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book.

“Consumers who plan to sell or trade in a used car soon will likely see their vehicle hold its value well. Alternatively, shoppers in the market for a used car will continue to pay more, making it difficult to buy at a discount,” he said.

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(c) 2011, Los Angeles Times. Visit the Los Angeles Times on the Internet at http://www.latimes.com/.
Distributed by McClatchy-Tribune Information Services.
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