Are you ready for a used car bargain? Consider a smaller model or a hybrid; Recent auto news reports detailed a dramatic drop in prices for subcompact and similarly sized cars. According to the latest trend report, an entry-level sports model saw a price reduction of about 2.1%, while subcompacts were down a whopping 2.8%. Minivans and compact cars also fell in price with an overall 2% drop. Some individual models are showing drops of up to 12.5% over the prior quarter costs, including hybrids; some used models are down as much as 10%.
What’s behind this new pricing trend for smaller used cars?
While standard-size vehicles, SUVs, and trucks are actually increasing in price, buyers are choosing smaller models for a variety of reasons. Falling and stable gasoline prices made family cars and big attractions more attractive. Hybrids also don’t sell as well when low gas prices make the news. Cars designed to save fuel have been delayed in batches for longer periods of time, leading to naturally lower prices.
Lower prices for smaller used cars are directly related to the rebound in leasing seen in previous years. Most low-priced vehicles are known for their fuel economy and are three to five years old. The increase in the leasing of small, subcompact and hybrid vehicles peaked in the period between 2010 and 2012 and was directly related to the record gasoline prices registered in those years.
Now that those leases have ended and gas prices are more stable, used cars returned after their lease term ended have now flooded the market, directly affecting resale prices. Considering recent trends, the price of these vehicles is likely to continue to be low as more cars enter the second-hand market, making a small model excellent value for buyers. The current low price trend reflects models that are between one and five years old and represents a wide range of brands and styles.
The supply and demand rule also applies to the used vehicle market. As so many fuel-efficient models hit the market, prices naturally get lower. In contrast, leases of large trucks, SUVs and sports models that were not fuel efficient decreased accordingly as fuel prices increased. Fewer large trucks are now available for resale, resulting in static or even rising prices. The latest used car pricing models reflect this continuing trend, and it is likely to continue for at least the rest of the year and possibly longer.
The glut of small used cars and hybrids in an already crowded market means big news for buyers. Consumers looking for a commuter model or great value in a used vehicle will be able to find a surprising variety of options thanks to the latest trends.