Edmunds Report Reveals Older, More Affordable Used Vehicles Becoming Scarce
Thanks to the rising popularity of leasing, in 2016 used vehicles became newer and pricier than ever
Santa Monica, CA — February 15, 2017 — For consumers considering trading in or selling their older used vehicle, 2017 could be the perfect time to take the leap, according to the latest Used Vehicle Market Report from Edmunds.
The expert analysts at the leading car shopping and information platform predict a record number of off-lease vehicles will fill dealer lots and that a declining number of older trade-ins will put significant upward pressure on the late model used market this year. The average used vehicle trade-in is six-years-old, and Edmunds predicts the number of trade-ins will dip below six million this year for the first time since 2012.
“While low interest rates and consistent values are making it possible for the market to absorb these newer, more expensive off-lease vehicles, demand for older, less expensive used vehicles hasn’t waned,” Edmunds senior analyst Ivan Drury said. “Fewer older vehicles available puts sellers at an advantage, particularly those looking to sell vehicles that are in high demand like trucks and SUVs.”
In 2016, 38.5 million vehicles were sold in the used market, an increase of 0.6% from 2015. Thanks to the rise in leasing, the average used vehicle sold by a franchise dealer in 2016 was 4.1 years old, setting a new record low age and helping push the average used vehicle transaction price up to a record $19,189.
Sales of certified pre-owned (CPO) vehicles hit a new record as well in 2016—reaching 2.6 million units and encompassing 22.8% of all used vehicles sold by franchise dealers. However, the year-over-year growth in CPO sales was only 3.5%.
“CPO sales actually didn’t grow as much as would have been expected, given the number of vehicles coming off of lease,” Drury said. “This indicates dealers put more off-lease vehicles directly onto lots instead of going through the certification process, which could be one factor keeping pricing in check and allowing the market to absorb so many newer vehicles entering the market at once.”
Because lease terms on average over around 36 months, Edmunds analysts looked at lease rates from 2014 to get a rough estimate of how many vehicles are anticipated to come off lease in 2017. Lease volume rose 10.6% in 2014 compared to 2015, meaning the number of vehicles coming off lease in 2017 is likely to set another record. Lease volume also continued to set year-over-year records in 2015 and 2016, meaning off-lease volume is expected to grow rapidly in the years ahead.
“The used market as a whole is definitely in the midst of a significant transition that’s only just starting to accelerate,” Drury said.
Edmunds is the leading car information and shopping platform, helping millions of visitors each month find their perfect car. With products like Edmunds Your Price, Your Lease and Used+, shoppers can buy smarter with instant, upfront prices for cars and trucks currently for sale at more than 13,000 dealer franchises across the U.S. The company is regarded as one of America’s best workplaces by Fortune and Great Places to Work. Edmunds is based in Santa Monica, California, and has a satellite office in downtown Detroit, Michigan.