The trend of falling used car prices will continue into 2014, thanks to an increase in vehicle volume and the number of retired-rental and repossessed vehicles returning to the market.
According to the Manheim Used Vehicle Value Index, prices of used vehicles on average dropped last month from prior-month levels but were higher than last year’s index. Last month’s index was also the first reading since May to show a decline from the previous month.
Manheim chief economist Tom Webb says that the used-vehicle market will remain favorable for dealers. In addition, the increase in off-lease vehicles is favorable for dealers since dealers take back those vehicles from the owners on behalf of the lessors, prior to purchasing it from the financing company.
“The intense increases in prices that we had when supply shortages were very severe did in fact hurt dealers’ gross margins on retail sales,” Webb said.
[Source: Automotive News]