Demand for used vehicles climbs in MayDate posted: 6/19/14 07:15:00 AM
Demand for used vehicles climbed in May, which helped keep vehicle depreciation to a minimum, according to NADA, which represents nearly 16,000 car and truck dealerships. Consumer interest in used vehicles lifted NADA's used vehicle price index to 126.8, which topped the previous month's record total by 0.5 percent.
Jonathan Banks, executive automotive analyst of NADA Used Car Guide, said that winter weather played a part in the recent surge in demand, which in turn has impacted the rate of depreciation and overall vehicle price.
"Auto demand blossomed in May as warmer weather and the fast approaching summer vacation season pulled more consumers to dealer lots," Banks said.
Depreciation for used vehicles up to eight years old was just 2.2 percent compared to April, leading to higher prices when seasonally adjusted. Depreciation for all areas of the market was equivalent to the nation's market in 2011 and 2012. Those two years saw limited price diminishes for small and mid-size cars compared to the overall market average. Meanwhile, losses for other vehicle types were at or below the industry average.
"A combination of pent up demand and restrained supply stemming from severe winter weather drove prices well above expectations in March," Banks said. "Over the past two months, though, prices have steadily realigned with NADA's predicted path."
Consumers that own a home but don't quite have the financial means to purchase a new or used car should consider a home equity line of credit. Qualified borrowers can use this line of credit for home renovations, student loan repayment or a down payment on a car.
Vehicles that keep their value
Consumers interested in purchasing a vehicle with the best resale value should consider a pickup truck. Widely known for their durable construction, pickup trucks generally hold their value well, according to a study from CarGurus.com.
The study examined the price of used cars from March 2013 to March 2014, comparing models that were built from 2008 to 2012. The median model lost 9.8 percent year-over-year in March. More than 575 models were included in the study.
The top vehicle for retaining value was the 2012 Dodge Ram pickup. The Nissan Titan, Ford F-150 and Chevrolet Silverado - all pickup trucks - were also high on the list.
The 2010 BMW 3 series was among the the worst vehicles at retaining value. The 2012 Mercedes-Benz E Series, 2008 Volvo XC90, 2009 Audi A4, 2009 Cadillac STS and 2012 Cadillac SRX also proved to be poor at holding value.
"Luxury cars tend to be loaded up with options, and we found that options do not hold value," said Langley Steinert, founder of CarGurus.com. "When used car buyers go shopping they don't care about (fancy) wheels and navigation. It's about the year and mileage."
AutoExpress reported that SUVs and 4x4s tend to hold their value better than any other type of vehicle. After a three-year, 36,000-mile ownership period, SUVs retained an average of 46.6 percent of their original sales price.
The top 10 for retaining value
Along with the top-rated Dodge Ram pickup, the Nissan Titan - another pickup truck - finished second in retaining value. Other pickups proved to be strong price retainers as well, as the Ford F-150 finished fourth, the Chevrolet Silverado was fifth and Ram 2500 seventh.
The top car in the field, the Dodge Charger, came in third among all vehicles at retaining its value.
Rounding out the top 10 includes the Jeep Liberty (sixth), 2008 Dodge Ram 2500 (eighth), Jeep Wrangler (ninth) and Chevrolet Tahoe (10th).
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