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Have Used Car Prices Peaked?

man looking at used cars for sale
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There's an interesting debate in the auto industry right now about used car prices.

After surging to an all time high in May, the question is whether they have a peaked?

Kelley Blue Book for one says yes, with used car run in prices hitting a top in May, and actually pulling back 0.6%. If true, Kelley's data shows prices for many vehicles, especially fuel efficient small cars have surged between 15% and 34%.

Look at the change in used prices year over year for some models:

  • "08 Toyota Prius up $4,650 to 18,250
  • '08 Ford Focus up $2,600 to $11,100
  • '08 Nissan Versa up $1,925 to $10,325

The folks at KBB believe moderating oil prices should ease the demand for fuel efficient cars this summer.

But have they peaked?

Used car wholesaler Adesa thinks so. Tom Kontos with Adesa believes there is so little "headroom" between used car prices and new car prices, there's little only so much higher used prices can go. According to Adesa, last month wholesale prices for used cars jumped 6.9% to an average of 10,037. Kontos points out that used vehicle prices historically ease up in summer months, once we get past the spring sales demand.

So why am I hearing from dealers who think used car prices have not topped out?

Their primary concern is the fact the supply of new and used models remains tight. Yes, automakers are gradually ramping up production, but the pinch in production from Japans' earthquake and tsunami will continue to mean tight supplies for another month or two. And there is already pent up demand from loyal Toyota and Honda buyers who have put off buying a new car and are itching to finally make a move.

All of this means the summer sales season at dealerships around the country should see used vehicle prices remaining high, even if they do pull back a bit. As one dealer put it, "If you are looking for a big drop in prices, it won't happen before this fall."

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