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Used-car prices are starting to come down

Easing gasoline prices in much of the nation and more trade-ins from a pickup in new-car sales are behind the decrease.

May 31, 2012|By Jerry Hirsch, Los Angeles Times

Used-car prices, which had shot up in recent years, are starting to fall.

Easing gasoline prices in much of the nation and more trade-ins from a pickup in new-car sales are behind the decrease.

Used-car prices are expected to decline 2% in June from May, according to the National Automobile Dealers Assn. Used Car Guide. Used truck prices are expected to fall 1%.

Some used cars, especially fuel-efficient autos, will see much larger drops, the association said, as falling gas prices reduces demand for the vehicles.

The decline is evident in the latest prices for several of the bestselling passenger cars.

The price of a 2009 Toyota Camry rose 15% to $13,235 from January to May, but is projected to fall back $675, or 5%, to $12,560 in June.

The price of a 2011 Ford Fusion is expected to drop to $15,112 in June, down 4% from May. The Fusion price rose 10% from January to May.

After rising 12% to $21,225 from January to May, the price of a 2011 Toyota Prius is expected to fall $900, or 4%, to $20,325 in June.

The association said it expected to see prices continuing to fall sharply for small and mid-size cars in July.

Used-auto prices remain strong by historic standards, but the market started showing signs of softening in recent weeks, said Ricky Beggs, an analyst at Black Book, which tracks new- and used-car pricing for auto dealers and financial institutions.

Overall, he said, prices have leveled off and will start to fall over the coming months.

High used-car prices are an echo effect of the credit crunch and subsequent recession in 2008 and 2009. The credit crunch slashed the number of new-auto leases, which are an important source of late-model used cars as the leases expire.

Plunging new-car purchases, both by consumers and rental car companies, during the recession also shrank the supply of used cars available now. This was compounded by the so-called cash for clunkers economic stimulus program during the summer of 2009, which pulled 700,000 older cars off the roads.

The auto industry is on pace to sell about 14.3 million vehicles this year, about 1.5 million more than last year, Beggs said.

"About 60% of new cars sold will have a trade-in, so we are talking about another 900,000 potential used cars coming into the marketplace that we didn't have last year," he said.

Beggs noted that this is a two-edged sword for consumers. Although they will be able to get a better deal on a used car in the coming months, they will get less for their trade-in when they purchase a new car.

jerry.hirsch@latimes.com

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