By Quentin Fottrell
Slap a for-sale sign on that old jalopy.
Used car prices rose for the first time in months, according to March consumer price index data released by the Labor Department Friday. Prices for used cars and trucks rose 1.3% from the previous month after falling a cumulative 3.2% over the preceding six months. Used cars also outperformed the overall index, which rose a seasonally adjusted 0.3% during March. Experts say the used car market is finally showing signs of a turnaround. “People are shopping for cars again because people are feeling better about the economy,” says Rick Wainschel, vice-president of automotive insights at AutoTrader.com.
Lingering uncertainty about the jobs market is leading more consumers to consider used cars. Some 60% of new car shoppers are more likely to consider a certified pre-owned vehicle, according to a recent survey by AutoTrader.com, and 29% of those new car shoppers are considering pre-owned cars for the first time. What’s more, used car sales in March topped 170,000 for the first time, according to a survey by AutoData. “There’s still a bit of wariness among car buyers about the economy, so they are open to used cars,” Wainschel says.
The market for older, less fuel-efficient cars may also be helped by slower growth in energy prices. Gasoline prices rose by just 1.7% in March after spiking 6% in February, according to the data. “This is an excellent time to sell a used car, except maybe a gas guzzler,” says Joe Wiesenfelder, executive editor at Cars.com. “Dealers are desperate for used cars to sell. If you have what they want, you can expect a decent trade-in payoff.” But he says higher gas prices in recent months have also triggered demand for fuel efficient vehicles, both new and used.
Seasonal factors may also be playing a part in pushing up prices, experts say. “Springtime is usually when used-car values reach their height for the year,” Wiesenfelder says, “so I wouldn’t count on prices continuing to rise throughout the summer.” But as SmartMoney.com reported, dealers argue that used cars still offer great value for both buyers and sellers as new cars can lose 15% to 30% of their value just in the first year of driving. And according to UsedCar.com, the average used-car price is about half that of the average new-car price.