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Used-car prices soar, slowing depreciation

August 12, 2011|By Jerry Hirsch, Los Angeles Times

Normally, the value of a new car plunges as it's driven out of the dealership by its new owner.

But slumping auto sales and leases in recent years have changed that axiom by creating a shortage of late-model-year used cars, according to auto price information company Kelley Blue Book.

The average value of a 1- to 3-year-old used vehicle has increased from $15,000 in 2008 to more than $23,000 in 2011, an annual average increase of nearly 16%, Kelley analysts said.

They expect used-car pricing to remain strong because it will take several years of strong new-car sales to replenish the shortage of used vehicles that is pushing prices up now.

"While depreciation typically affects a vehicle's value most in the first two years of ownership, it will not be as pronounced as it would have been a few years ago when the used-car supply was still very high," said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book.

"Consumers who plan to sell or trade in a used car soon will likely see their vehicle hold its value well. Alternatively, shoppers in the market for a used car will continue to pay more, making it difficult to buy at a discount," he said.

jerry.hirsch@latimes.com

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