A lack of used cars has led to dealers willing to pay very high prices for models, making it one of the best time in years to sell a car.
The Associated Press reports that more drivers held onto their cars during the recession, meaning that the normal cycle of buying a new car and then selling it to a used dealer was considerably disrupted. Used car dealers are now beginning to feel the effects, and are thus paying higher prices simply to fill up their lots.
According to data from the National Automobile Dealers Association (NADA), dealers are paying an average of $11,660 for cars. That represents a near 30 percent increase since December 2008.
"You're not going to find a situation like this very often," Jonathan Banks, executive auto analyst for NADA, told the news source.
NADA's data isn't an anomaly by any means. Manheim, which is one of the biggest auto auction companies, has been tracking used car prices since 1995 with their monthly vehicle index. Chief economist for the company, Tom Webb, says that prices this year are the highest in the history of their tracking.
The chief reason is the fact that buyers are holding onto their vehicles for longer. During the recession, most drivers couldn't afford to purchase a new vehicle. Instead, they opted to hold onto their current car. In addition, many people decided to buy used cars rather than new ones. That continued activity has led to a dwindling supply of cars for used car dealers. Anyone who's taking a basic economics class can predict what happens next. With little supply of used cars over a number of years, dealer demand has built up to the point that they're willing to pay high prices for the vehicles.
According to data from Polk Research, the average age of a car on the road is now 10.6 years, up from 9.8 in 2007. That can partially be attributed to the economy, but another factor is that cars are simply lasting longer. Automakers have really stepped up their long-term reliability, meaning it's not necessary to switch models every few years.
That said, there's no telling how long these good prices will last. Manheim predicts that prices will fall off again in approximately two months. Leasing also became more popular during the recession, so the end of three-year leases will likely mean a large influx of used cars.
If you're looking to trade your vehicle, New Jersey State Auto Auction is a great choice. They offer fantastic prices that are often well above the Kelley Blue Book value and can get you a great deal on a new car as well.