Better used car deals for those who wait

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If you’re looking to buy a used car, you’d be better off waiting out the current high prices, according to the latest analysis from the folks over at Kelley Blue Book.

Used vehicle prices are up 25% over just the last several months. That’s an unprecedented development during my lifetime at least. You’d probably have to go back to just after World War II to find a similar circumstance.

The factors behind the sudden surge in used car values involve the marketplace, government intervention in the free market and even the natural disaster in Japan.

When the recession hit, cars sales fell off a cliff and the automakers that were used to building in an automatic future demand by doing short-term leases couldn’t afford to be in the leasing business anymore. So there was no normal cycle of leased vehicles coming back to dealer lots, creating an extreme shortage of those newer used vehicles.

In addition, the supply of older used cars was soaked up by Cash for Clunkers as a lot of cars were taken off lots when the government crushed them.

Finally, the Japanese earthquake led to shortages in new cars diverting some buyers to the used car market.

Kelley Blue Book is now saying that used car values have peaked. They recommend that if you can wait another 90 days to make a move on buying a used car, you will be rewarded with lower prices.

However, my best guess is that you should wait until between Thanksgiving and Christmas. I believe it’s going to take a little longer for the market to return to its pre-surge levels. So I think the holidays will be the sweet spot when it will be a decent purchase again to buy a used vehicle.



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