The Used Car Market

Many people assume that the trend to watch in the coming months and year will be in the new car market. After all, many car manufacturers are promising great rates, employee pricing, and low prices. While all the marketing hype may seem exciting, CreditIQ.com, a company which processes credit applications for cars, says that the real trend to watch is in the used car market. In fact, employee pricing means that more people are buying new – and experiencing the higher costs and depreciation that comes with buying a new vehicle – which means more previously-owned cars on the market now and in the near future. The current $350 billion U.S. used car market may grow to even higher proportions in years to come.

One key trend that is likely to occur in the coming months is a real dealer hunger for used cars. In the two and a half decades that the National Automobile Dealers Association (NADA) has compiled statistics about how much profits dealers can stand to make over new and used cars, the gap between new and used has never been wider. Used cars make dealers far more than new cars, which means that dealers selling new cars try to push many “extras” to make up the difference while dealers selling used are now offering better deals to sellers than ever before. Plus, the situation is only likely to accelerate due to the flagging housing and credit markets, which will push customers to seek quality newer model pre-owned cars rather than try to qualify for financing on a new car.

Since the start of the 2000s, the average price of a new car has moved up only 3% to around $28,500, reports NADA, and now improved car sales may make the used car market even hotter.

One key trend that car buyers will want to be aware of is that experts predict a large number of flood-damaged cars to show up in the used car market. Recent flooding in Western Washington and even some left-over cars from previous floods have meant that some unscrupulous sellers will try to sell these vehicles. Plus, this past harsh winter will likely create some very damaged used cars which should have flags on the title but which might be sold out of state to hide the evidence. Buyers should be aware of this trend and only buy from used car retailers who are trustworthy. Consumers can also protect themselves in the used car market by getting a mechanic to check the vehicle and by checking the vehicle’s “VIN” number.

Another key trend in the used car market appears to be the Internet. A recent study reported that while in 2002 shoppers looking for a pre-owner vehicle spend 4.8 hours researching and shopping online, in 2003, the number of hours had jumped to 5.5. Plus, 47% of used car buyers use the Internet to compare and find car deals, according to researchers. And the savvy shoppers seem to focus on independent sites rather than on manufacturer or dealer web sites. The overall trend here is that shoppers use the Internet to pinpoint the best of the best deals when shopping for a used car, and it appears that buyers are becoming more picky and web-savvy as the years go by.