TORONTO – The price of a used vehicle will increase over the
next few years as demand for new vehicles slips, according to a U.S. automotive
market report by Kelley Blue Book.
The Blue Book
Market Report for August 2011, an industry authority in automotive
valuation and resale pricing in the U.S., suggests the decline in new car
manufacturing from two years ago will impact the value of used cars today and
for years to come.
Thanks to reduced new car supply from 2008 and 2009, the
average value of a used vehicle less than 5-years-old is forecasted to increase
by just over 15 per cent per year, or approximately US$8,000.
The Kelley Blue Book forecasts the average cost of a used
car one- to three-years-old will increase to more than US$23,000 in 2011.
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North of the border, the Canadian
Black Book is the industry authority in new and used car appraisals, reviews
and listings.
Warren Barnard is the Legal Services Director at
Used Car Dealers Association of Ontario.
Barnard attributes the forecasted increase in used car prices to pent-up demand
for young used vehicles.
“The effect the used market is seeing now in Canada and the
U.S., from the slump in 2009, is a lack of inventory,” Barnard explains. “Automotive leasing virtually ground to a
halt certainly with domestic manufacturers in 2009. They stopped leasing cars.
Those two and three year leases should now be coming into the marketplace
through auctions and people bringing back their off-lease vehicles,” he says.
While new vehicle sales continue to fluctuate –in June,
sales set a new Seasonally Adjusted Annual Rate high before tapering off in July-the
market is clearly bouncing back with most analysts expecting new vehicle sales
to go up.
DesRosiers Automotive Consultants predicts the Canadian market
will near 1.8 million new vehicle sales, or more, by the end of 2011.
“That’s good
from the used vehicle market perspective,” Barnard says. “The used vehicle market
depends on new vehicle sales because that’s where the future inventory comes
from.”
“We’re going to see that inventory or supply shortage (of
2009) dissipate over the years and that, I think, is part of where everyone
will expect new vehicle sales to start increasing over the next few years.”
The bottom line for consumers in the market for a new or
used set of wheels? “Cars aren’t going
away and people are going to continue to buy them,” Barnard says, optimistic
about the resale outlook for 2011-2012.
“At the end of the
day, purchasing a used vehicle, you’re buying something that the initial
depreciation has obviously been taken care of so there’s excellent value in buying
a used vehicle.”
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