Used car prices have hit an all-time high.
The New York Times reports, "Used vehicle prices shot to an all-time high last month, spurred by falling inventories, according to a closely watched barometer of the second-hand car business." The Manheim Used Vehicle Value Index tracks the wholesale value of used cars - what car dealerships pay for the cars at auction - which, analysts say, closely mirrors the retail value of used cars. The index, the Times reports, "Rose 6.9 percent in September to a record high of 118.5." The index, prepared by Manheim Consulting, "Is adjusted for vehicle mix and seasonality. A value of 100 represents used vehicle prices in January 1995."
Kicking Tires explains, "Low inventories led to an increase in used-car prices. Much of this is due to the Cash for Clunkers program, which sapped new-car inventories and forced dealers to scrap and recycle vehicles that might normally be trade-ins. The higher prices were also influenced by fewer vehicles from rental car companies landing in the used market," since rental car companies have responded to the recession by holding onto their vehicles longer, and making fewer new-car purchases, than they normally would. Traditional summer shutdowns at most auto factories also constrained car supply last month.
The news is not great for used-car shoppers, but new-car shoppers stand to benefit. Higher used-car prices mean higher trade-in prices.
It won't last, however. Kicking Tires notes, "The consulting firm also predicted that used-car prices have peaked. With the end of Cash for Clunkers, used-car prices should begin to creep back down."
If you're in the market for a new car, check out the U.S. News rankings of this year's best cars as well as this month's best car deals.
