With new vehicle prices continuing to rise, a new report shows an abundance of lightly-used SUVs and trucks could push more shoppers into the pre-owned market in 2019.
According to the latest Edmunds Used Vehicle Report from Edmunds.com Inc., an automotive research firm based in Santa Monica, Calif., the abundance of low mileage off-lease vehicles could be shifting consumers’ buying habits in the year ahead.
For the report, analysts from Edmunds studied nationwide used car dealership data for the first quarter of 2019. They found that two out of three used cars sold are four years old or newer, while the average age of a used vehicle dropped to 4.3 years in 2019, compared to 5 years in 2014.
“Used vehicles today actually look a lot like new vehicles,” Ivan Drury, senior manager of industry analysis at Edmunds, said in a statement.
The shift to used cars sales in an era of plateauing new car sales volumes could have key implications for West Michigan-based automotive suppliers, according to industry sources.
The Edmunds study also noted these used vehicles match the increased popularity of SUVs and trucks among consumers and carry far more standard features than they did five years ago. In the first quarter of 2019, SUVs comprised 40 percent of the used car market compared to 32 percent in 2014. Trucks also took a percentage point more of the market in the same time period, growing from 13 percent to 14 percent.
Lower vehicle sales during the recession has translated into a limited inventory of older cars, and thanks to record sales and leasing during the recovery, the typical used vehicle performs more like a late model-year SUV with low mileage and newer features, Drury said.
Meanwhile, new car sales are projected to decrease by about 2 percent compared to last year, according to a joint report released last month by J.D. Power and LMC Automotive Ltd.
“May is one of the highest volume months of the year and its performance typically indicates
how the year will play out,” Thomas King, senior vice president of data and analytics at J.D. Power, said in a statement. “The expected sales decline in May, coupled with weak sales year to date has left the industry with rising inventories of unsold vehicles.”
However, record transaction prices mean that the total value of new vehicles purchased is expected to increase despite the softening sales volume.
Used vehicle prices also have risen as a result of the newer, larger, and more technologically advanced used vehicles hitting dealer lots. The average transaction price of a used car in the first quarter of 2019 hit a record of $20,247. Yet, prices still reflect significant savings over new vehicles, for which sales prices averaged $36,597.
“Although used car prices are up year-over-year, the gap between new and used continues to widen,” Drury said. “And, now that used cars are starting to mirror new ones in terms of available features, body types and mileage ― all while presenting tremendous savings to shoppers ― used vehicles are a more compelling alternative than they’ve ever been.”