A Good Time to Trade in That Gently Used Car
That three-year-old car sitting in the driveway may not seem so exciting anymore, but to some car dealers it could be gold.
Informed shoppers with well-maintained cars to trade in have an unusual opportunity to take advantage of what industry analysts say is a record peak in used-car prices. Resale and trade-in values for late-model vehicles in good condition have been rising all year as demand has outstripped supply, particularly for fuel-efficient models.
Among the forces driving up used-car values is a shortage of many popular Japanese models due to production slowdowns following the March earthquake. And the sales collapse during the 2008 and 2009 financial crisis means fewer two- and three-year-old cars are available.
The National Automobile Dealers Association last week raised values again on many small- and medium-size cars in its latest Used Car Guide, which is widely used by dealers when deciding what to offer for cars taken as trade-ins.
A one-year-old Honda Civic that NADA”s Used Car Guide valued at $14,275 in May is now estimated to be worth $15,950. “The same car,” says Jonathan Banks, NADA”s executive auto analyst.
KBB.com, the Web home of the Kelley Blue Book used-vehicle-pricing franchise, says a three-year-old Toyota Prius is worth, on average, $17,750 as a trade-in, up $6,050 from the value of a three-year-old Prius a year ago.
The market isn”t booming for all types of vehicles. Large sport utility vehicles, such as a Ford Expedition or Chevrolet Tahoe are down less than 1% from a year ago, according to NADA”s guide. Still, they are up nearly 5% from the start of the year.
Late-model, mid-size luxury cars—a segment that includes the Mercedes E-Class and the BMW 5-Series—are worth about 6% more on average than a year ago, according to NADA.
“We have seen extremely strong pricing,” says Jeremy Meyer, national manager for Audi”s U.S. certified pre-owned sales operation. And “consumers are willing to pay those higher prices,” he says.
Manheim Consulting, an arm of the big Manheim auto-auction business, has for years published an index of used-vehicle values. In May, that index, using a scale with a baseline set at 100 for January 1995, was 127.8—a record high.
For consumers, this is now a game of arbitrage and information gathering. Prices for many new vehicles are up, but not as much as values for in-demand, late-model used cars.
“The best case scenario is that you have a trade-in that is somewhat gas efficient, and you are ready to trade for a larger vehicle,” says Jesse Toprak of Truecar.com, an auto-shopping and data site.
For people who have a leased car that”s close to the end of its term, now is the time to figure out whether that car is worth more than the residual value assigned in the lease contract.
For example, a 2008 BMW 3-Series has an average residual value of about $17,450, but a trade-in value of close to $20,000, according to data compiled by Truecar.
Economical models such as a used Honda Civic can command the best prices.
NADA”s Mr. Banks says anyone with a leased car that”s due to be returned should investigate the car”s market value—using the online NADA guide and shopping sites such as KBB.com, Edmunds.com, Cars.com, Ebay, or Yahoo! Autos. Then be ready to bargain with the dealer to get a higher value than the one stipulated in the contract.
“Don”t just hand over your keys,” says Mr. Banks.
Realizing the extra value in a leased vehicle can be tricky, however. Selling a leased car to another individual could require buying it from the leasing company, then reselling it, and possibly paying sales tax.
Sergio Stiberman is a chief executive of planet auto. Used Cars in Virginia of each makes and models from car dealers in Virginia, car brokers and personal sellers at http://www.planetauto.info . Planet Auto has best used cars in Virgina Beach. You can seek car by make, model, year and cost range. Choose the best Used Cars in Virginia Beach for you and purchase it online at exceptional prices from Planet Auto Inc.
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