Used car prices rose again, but there is good news

Used car prices rose again, but there is good news

The average used car in America sold for $28,219 in July — an increase after several months of declines. But analysts don’t think the rise is a sign that rising prices will return.

If we pull back for a slightly longer view, the increase seems small. Price growth compared to the previous year was 28% in mid-April, but has been declining every week since then. The average offer price is now 11% higher than a year ago.

Maintain stock

Total supply of unsold used vehicles on dealer lots in the US was 2.46 million units at the end of July, about the same as the revised number at the end of June. That’s good news for car buyers. Last year’s rising prices were partly caused by low supply.

“Inventory volume at the end of July was 5% above the level of a year ago, so we are holding up. In fact, we’re tracking at a pretty normal pace in terms of supply,” said Chris Frey, Cox Automotive senior manager for Industry Insights. (Cox Automotive is the parent company of Kelley Blue Book.)

However, the other factor driving up prices remains with us. New car prices are still setting records month after month. In July, the average new car sold for a record $48,182. High prices push some potential new car buyers onto used lots. That in turn increases the prices of used cars.

Read: People Sell Corvettes For Profit And Chevy Will Pay Them To Quit

It is not the same at every dealer

Car dealers measure their supply of cars to sell in a measure called “inventory days” – how long it would take to sell cars at the current sales rate if they couldn’t acquire more.

By brand, Toyota TM,
and Honda HMC,
had the lowest stock of used vehicles, with daily stocks of 37 and 39 respectively. The two are also near the bottom for new car deliveries.

Other Asian automakers with low second-hand supply and scarce inventory of new vehicles include Subaru FUJHY,
and Hyundai HYMTF,
with used days stock of 43. Kia 000270,
meanwhile had only 44. Mazda MZDAY,
has an above average inventory of new vehicles, but is on the low side with a used vehicle inventory of 43 days

To see: Are you thinking of an electric car? First ever $4,000 tax credit for used electric vehicles, and $7,500 for new ones, gets OK from Congress.

Cheapest cars still hard to find

Waves that rock the new car market continue to ripple through the used car market years later. The aftermath of the 2008 recession still affects the cars you see on used car lots today. Automakers were selling fewer new cars then, meaning there are now few older used vehicles with higher mileage available.

Read: These are the 10 used car models whose prices rose the most in May

The under $10,000 segment has the lowest available offer and the lowest daily offer of 33, about the same as last month. The $10,000 to $15,000 segments had a supply drop from days to 38 from the 1940s a month earlier. Price ranges between $15,000 and $30,000, which represent the bulk of available inventory, had 42 to 50 day supply. Above $30,000, categories had 54 to 62 days of inventory.

This story originally ran