Used car sales rose 5.1% in the second quarter. Buyers are paying more for newer vehicles.
New vehicle sales have been scorching hot this year, and they’re having an impact on the used car market making the available inventory younger and pricier. Used car sales are up 5.1% for the second quarter of 2015.
Used car prices hit an all-time high in the second quarter, averaging $18,800, for a 7.6% increase on a year-over-year basis, according to Edmunds.com. Not only are they more expensive, the average age of a used car dropped from 4.9 years to 4.5 years.
Many of the used cars are vehicles coming off two- and three-year leases. These newer used cars are priced higher than older used cars. But just because newer used cars come at a heftier price point, it doesn’t mean that shoppers buying these vehicles are not locking in good values, Edmunds notes.
“Because there’s a growing inventory of newer used cars, the prices on these vehicles seem to be more consumer-friendly than in the past,” said Edmunds.com Director of Industry Analysis Jessica Caldwell.
“Three-year old used cars, for example, have more bells and whistles than older used cars, and they’re actually selling for less than they did just one year ago. Compare that to vehicles aged eight and over, whose prices are up 11% or more, on average, over last year. There’s undoubtedly a growing value proposition these days in newer used cars.”
These newer used cars give dealers more options for their certified pre-owned, or CPO, inventories. More and more buyers are looking for these vehicles because they come with substantial warranties, unlike many other used vehicles.
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Dealers love these vehicles because they charge a premium for them. In Q2 2015, dealers sold over 660,000 vehicles through CPO programs, the highest-ever volume for a single quarter. CPO sales accounted for 22.7% of used sales by dealers, another record for a single quarter.
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In addition to CPO sales rising, pickup trucks are seeing the biggest jump in prices. Compact trucks were up 8.7% during Q2 and full-size pickup sales rose 5.1%. Passenger cars are mirroring the sales trends in the new car market: they’re down.
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Sales are up and so is the amount financed for vehicles, Edmunds noted. The average is $20,732, which is a 3% jump from last year. The finance number is higher than the average sales price because many low-priced used car sales are all-cash transactions. Not only is the number higher, the term is growing as well, and for the first time since before the recession, average APRs on used car loans are creeping higher.