Used Car Prices Starting to Fall

Phil LeBeau | @Lebeaucarnews

Published 11:41 AM ET Fri, 15 June 2012 Updated 7:39 AM ET Tue, 19 June 2012 CNBC.com

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After three years with used car prices surging to levels where it often made more sense to buy new instead of used, the price pendulum for pre-owned cars is swinging the other way.

It’s not a huge pull back so far, but dealers are increasingly looking for used car prices to moderate.

The latest data comes from ADESA Wholesale Vehicle Auctions. ADESA is one of the larger firms auto dealers use to buy and sell used cars and trucks. In May , the numbers continued falling from earlier this year.

May Change vs. April

• Avg. used vehicle price: $10,271 (down) $306

• Avg. Used car price: $9,546 (down) $409

• Avg. used truck price: $11,038 (down) $207

Among the sub sectors, the only increases were seen in full-size van and full-size SUV prices. Two groups that clearly benefit from limited supply and greater demand as gas prices ease.

“Spring is always the high water mark of the year for used vehicle prices, but for the rest of this year and into next year we have probably seen the highest prices” says Tom Kontos with ADESA.

What are the factors bringing used prices down?

The primary reason is the greater supply of new vehicles and dealers are finding it easier to write auto loans for more potential buyers (those with lower credit ratings). As a result, many people who might have bought used now have more options with new models.

Also, manufacturers (particularly the Japanese brands) have become much more aggressive with rebates and special financing offers. Zero percent financing on a new car is tough to beat compared to 3.9 percent for a used one.

If you are thinking about buying used, the market is slowly moving in your favor. Don’t expect huge drops in prices, but you will have more pricing power on the used lot.