Used Prices to Drive New Car Sales in Fourth Quarter

Oct 14, 2011, 14:11 ET from National Automobile Dealers Association

MCLEAN, Va., Oct. 14, 2011 /PRNewswire-USNewswire/ -- Above average trade-in values for used cars are expected to increase new vehicle sales in the fourth quarter, says Jonathan Banks, senior analyst with the National Automobile Dealers Association (NADA) Used Car Guide.

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"We expect consumer demand for small and mid-size, fuel-efficient cars to shift from the used market to the new market in the fourth quarter," Banks said. "Automakers based in Japan will likely increase incentives to boost lost market share after the production disruptions from the earthquake and tsunami in March."

Trade-in values on many 3- to 5-year-old small cars, such as the Chevrolet Cobalt, Honda Civic and Toyota Corolla are about 10 percent higher in September than a year ago, according to the NADA Used Car Guide.

"Higher trade-in values will help facilitate new vehicle purchases because car owners have an equity built into the deal, which they can use as a down payment," Banks added. "Higher used prices will also drive more car shoppers to choose new vehicles instead of used ones because monthly payments between a new and used purchase will be closer."

Used car prices at the end of the year will still be higher than last year, but not at the levels during the peak in May and June when prices jumped 25-30 percent higher, Banks said on "AutoFocus with David Hyatt," an NADA public affairs TV program. Click here for the interview.

About the NADA Used Car Guide
NADA Used Car Guide, over its 78-year history, has earned the reputation as a leader in providing accurate and comprehensive vehicle valuation products, services and information to businesses worldwide. NADA collects and analyzes more than 1 million combined wholesale and retail auto-related transaction prices each month. NADA's guidebooks, auction data, analysis and data solutions offer automotive, financial, insurance and government professionals the timely information and reliable solutions they need to make better business decisions. For more information, visit www.nada.com/b2b.

The NADA Story
In 1917, thirty auto dealers traveled to the nation's capital to convince Congress not to impose a luxury tax on the automobile. They successfully argued that the automobile is a necessity of American life, not a luxury. From that experience was born the National Automobile Dealers Association. Today, NADA represents nearly 16,000 new-car and -truck dealerships with 32,500 franchises, both domestic and international. For more information, visit www.nada.org.

SOURCE National Automobile Dealers Association



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