We’ve been suggesting for months that this has been one of the weakest Spring markets in memory, recent or otherwise. Frankly, we are not surprised. We have had three or four exceptional new vehicle sales years in a row. The past year and a half has been dominated by extreme incentives that have pushed millions of buyers into new vehicles they might otherwise have done without. Lease returns are flooding the used car market in near record numbers. And the economy is staggering. What in that scenario would foreshadow a strong market for used vehicles?
What these conditions have created, however, are some real bargains in used vehicles. Dealers may find some real sales potential from among those many vehicles that have been beaten down by the market conditions. Take, for example, a one-year-old Cadillac deVille. A year ago that car had a book value of $28,000. Today, a one-year-old deVille has a book value of $24,000, or $4000 less than the same vehicle was worth last year. That is not a particularly unusual case. A one-year-old Mercedes E320 is worth $3,400 less than a year ago. A one-year-old Jaguar XJ8, $4,300 less. A one-year-old Lincoln Town Car, $4,000 less. It is, in fact, fairly typical for a one-year-old vehicle to be worth 10-15% less than it was a year ago.
The extreme pressure new vehicle incentives have created to push down the value of one-year-old vehicles has, of course, filtered down to older vehicles as well. Those vehicles coming off of lease in large quantities, primarily three year old cars and trucks on 33 to 39 month leases, were a bargain last year and are even more so today. A three-year-old Honda Accord LX was in the book last year for $11,150. Today a three-year-old Accord LX is in the book for $9900, or $1250 less than a year ago. A three-year-old Chrysler Town and Country Limited is in the book for $1950 less than its counterpart a year ago. A three-year-old Lexus GS300 is worth $2600 less this year than last. A three-year-old Mercedes CLK 320 Cabriolet, $3800 less.
As you can see, there really are some good buys to be had in the used car market. Of course, convincing retail buyers of that fact may be another story. We hope this sort of information might help to inspire some used vehicle sales.
We are in the process of putting 2003 prices into the books, and we can tell you that it looks as if they are suffering the same fate and will be going into the books for substantially less than their current year counterparts did a year ago. If you are confronted with one as a purchase or trade-in, be careful. As always, don’t hesitate to call or email us for assistance.