The monthly new-vehicle sales reports are due out from automakers on Sept. 4, and expected to show a 17-percent uptick, according to TrueCars.com.
Taking the pulse of new car and truck sales is always a good economy story. For example, ask area dealers if rising demand for new vehicles has boosted employment in their sales and service divisions. Talk with local lenders about borrowing and repayment trends — TransUnion says auto loan delinquencies again are at record lows , and the CUNA Mutual Group’s monthly trend report says used-car lending is outpacing new car lending at credit unions – up 4.3 percent in June compared to the year-ago period.
And of course, talk with buyers about what motivated the purchase and the price point they settled on. A personal finance round-up of car-buying tips, current lending rates, negotiating tips and other reader-friendly information is a worthwhile sidebar.
But the contrarian in me says it may be time to counter the routine new-car story with a look at some interesting trends in the used-car market.
Kelley Blue Book, for example, says the prices of late-model used cars are approaching those of new cars, in some cases. As the Detroit Free Press reported recently, “A year-old Chevrolet Camaro LT, for instance, sold for an average of $25,135 in the most recent survey of actual prices paid, only $126 less than the average paid for a new 2012. A 2011 Toyota 4Runner SR5 was only $254 less.”
Americans have been hanging on to their cars for record periods, and the average age of cars and trucks on the road is at 10.8 years — meaning fewer used models up for sale. That scarcity has had an inverse effect on residual value. Again, a side-by-side look at the local going rate for the new and ‘pre-owned’ version of several makes and models would be a useful twist on the new-car story.
Obviously the older a car gets, the wider the gap between the value of new and old, but you might enlist some experts to offer advice about finding the used-car “sweet spot” in terms of the trade-off between age, condition and price. Include a financial adviser (go to www.cfp.net to do a ZIP code search for people with the reputable CFP credential) and a mechanic or an instructor at an area automotive technology program.
Of course, price is only part of the equation. Used-car buying is fraught with potential for consumer woe, from financing issues, especially in the subprime arena, to fraud to issues for people placing online ads. According to a recent report published in USA Today, the Internet Crime Complaint Center has received more than 1,600 used-car-related complaints as of July 31. And in California, legislation is afoot that would require certain subprime dealer/lenders to provide warranties on high-mileage cars and offer other protection to buyers.
In a related story, the Los Angeles Times reports that some of these dealers who cater to people with problem credit can sell the same vehicle over and over to different buyers within a relatively short span of time. “From mid-2008 to this April, 862 licensed used-car dealers — about 1 in 8 statewide — sold at least one vehicle three or more times,” the Times reported. This would take some intense CAR to replicate in your market, but the eye-opening findings for readers would be well worth it.