Experts Baffled as Used Car Prices Unexpectedly Soar

Experts Baffled as Used Car Prices Unexpectedly Soar

( – If you’re thinking of selling your car, you could be in for a pleasant surprise. The latest market data shows used car prices are rising fast, after months of falling in value. The question is, does this increase mean good news for potential sellers — or bad news for everyone?

Used car values started to fall last May, and they kept on heading down for the next six months. When December’s figures were released, though, they showed a sudden and unexpected increase. Now, the January data shows that prices are still going up, even though market analysts didn’t see it coming.

According to the Manheim Used Vehicle Value Index, which follows wholesale numbers at used car auctions, prices in January were up 1.5% over December. Overall, those figures are now roughly where they were last August — but they’re still far below last January’s. Manheim says the average used vehicle is selling for 11% less than it did a year ago.

Manheim’s data also give hints at the sort of used vehicles that are in demand. Pickup trucks show the smallest drop on last year’s prices, down 8.4%. Compact cars are down 10.7%, and vans 11.2%. Things don’t look so good for full-size and luxury cars, though. Demand for those vehicles has fallen since December — which could be good news if you want to buy one and aren’t worried about gas prices.

Rising used car prices can also be a warning sign of higher inflation ahead. Unlike with most other products, the value of used cars responds quickly to market conditions. When prices change there’s normally some delay built in as stores sell off existing stock or work out new pricing strategies — but the used vehicle market operates much closer to pure supply and demand, so the resale value changes a lot faster. If second-hand cars cost more today, there’s a good chance everything else will cost more in a month or so.

~Here’s to Your Prosperity!

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