Used cars: Low supply, high demand drive up value
The used-car market has been going strong since the recession began, but high gasoline prices, shrinking inventories and seasonal factors are pushing the prices of some models through the roof this year.
The trade-in value of a 2008 Toyota Prius has increased $3,800 since Jan. 1, while the value of the Ford Escape hybrid is up about $1,950. Sam Godreau, used-car manager at Toyota of Berkeley, says some later-model used Priuses are selling at auction for more than their original sticker price.
Over the past year, the average retail price for a 3-year-old used car is up 4.5 percent, according to Edmunds.com. The strongest category is premium compact (up 20 percent), followed by full-size vans (18.9 percent), standard sports cars (17.2 percent), minivans (14 percent), midsize cars (14.8 percent), standard compacts (12.5 percent) and premium sports cars (8.4 percent).
When the recession hit, the production of new cars fell off a cliff. From 1998 through 2007, new-car sales and leases ranged between 16 million and 17.8 million vehicles per year. That number dropped to around 13.5 million in 2008 and 10.6 million in 2009. It recovered slightly, to around 11.6 million in 2010.
That slowdown means that a lot fewer 1-, 2- and 3-year-old cars are coming onto the used-car market. The government’s Cash for Clunkers program also took about 680,000 older cars off the market for good.