Credit Union Jacksonville - Used Car Market Update - 121 Financial ...

Last updated 16 hours ago

There are three major reasons the used car market is in the state it is today. ?They are:?

1) ?When the financial markets crashed in August and September of 2008, the banks and the captive finance arms (GMAC, Ford Credit, Toyota Credit, etc.) STOPPED lending money and specifically, STOPPED their leasing programs for almost a year. ?So, since the majority of leases are written for 36 to 39 months, and September 2011 marked exactly 36 months since the crash, from the Fall of 2011 to the Fall of 2012 there will be NO VEHICLES coming off lease and sold at the auction. ?This means FEWER low mileage and clean used cars in the market.?

2) ?In late July and August of 2009, Congress passed the infamous "Cash for Clunkers" Program. ?What this did was remove and destroy 750,000 inexpensive used vehicles from the market, specifically older and large SUVs. ?This completely wiped out the low-end used car market and is why NO ONE has $5k cars...most were destroyed.?

3) ?The used car market and auctions have historically been fueled by off-rental vehicles which are sold quarterly by Hertz, Avis, Enterprise, etc. ?When the market crashed in 2008, these companies STOPPED ordering vehicles from the factories to replace their fleets. ?The rental companies have been holding on to their vehicles and instead of turning them over at 20k miles, many are keeping them until they have 60k miles. ?(Just check the odometer the next time you rent a car and you will see what I mean!) ?They have only started to re-order replace vehicles in the past few months. ?So, fewer off-rental vehicles at auction means fewer used cars available to consumers and those that are sold have very high miles......?

Finally, as the economy has started to improve and people want to trade their old vehicles, instead of new they are looking for a value in a later model used vehicle. ?Many times we have to recommend buying new, because the difference between a later model used car and a brand new one, is usually only a couple thousand dollars! ?Regardless, this trend of buying later model used vehicles instead of new has further inflamed the used car market!?

Mark Hamrick

Auto Advisor

904-608-3424

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Source: http://www.121financialcreditunionjacksonville.com/367665/2012/02/10/used-car-market-update.html

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