- New car prices hit record highs
- Certified pre-owned (CPO) vehicle sales expected to rise as affordable alternatives
Used vehicle sales in 2019 are poised to hit the highest level since the recession, according to a new report from Edmunds. In 2018, 40.2 million used vehicles were sold in the U.S.; in 2019, Edmunds analysts predict used vehicle sales could approach 41 million. Edmunds experts say rising vehicle prices and high interest rates are pushing buyers out of the new market, and a record number of lease returns this year will give shoppers more options than ever in the used market.
“Typically sales of new and used vehicles follow the same pattern — if sales of new vehicles rise or fall, so do sales of used vehicles, and vice versa,” said Ivan Drury, Edmunds’ senior manager of industry analysis. “But now we’re seeing new vehicle sales fall while used rise, indicating the market has reached a flash point. New cars are getting so expensive that they’re out of reach for many car shoppers, but there are so many more affordable used vehicles coming off lease that the market is naturally shifting in that direction.”
Edmunds data shows that in 2013, the price gap between new and 3-year-old used vehicles was 56 percent, amounting to more than $11,000 in savings on average. In 2018, that number grew to 62 percent, totaling nearly $14,000 in savings on average. Edmunds data also reveals that new car interest rates jumped by 17 percent in 2018, whereas rates for used vehicles have risen at a slower clip, with interest rates increasing by 9 percent in the same period.
Edmunds experts say that these market conditions have never been more favorable for CPO vehicles, but there’s an opportunity for automakers to better educate car shoppers on the benefits of these programs. According to Google Trends data, relative search interest for CPO vehicles has steadily increased over the last five years, but the top pages viewed on Edmunds for shoppers of CPO vehicles are “What Are Certified Pre-Owned Vehicles?” and “Certified Pre-Owned Cars Vs. Used Cars With Extended Warranties.”
“Many shoppers are unaware of the benefits of CPO vehicle programs, but given the tough financial conditions in the new market, it’s never been a better time to look into them,” said Drury. “Between more affordable prices, the assurance of an automaker warranty, and lower interest rates, CPO vehicles give car shoppers a way to enjoy many of the benefits of a new car and minimize many of the risks of buying a used car.”