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Used-vehicle prices up but will decline on looming supply glut

November 10, 2010
Manufacturer incentives over time will draw consumers to new-vehicle purchases, and the resultant increased supply of used vehicles will cause their prices to fall, according to an analysis by an editor of the NADA Used-Car Guide. 

Jonathon Banks said: "Used-vehicle prices continued to follow an upward trend during March, and most indicators suggest the used market will continue to support high used prices.

"However, new-vehicle incentives at the current levels will cause the resale values of used vehicles to decline because car shoppers will shift from the used to the new market, while at the same time the used-vehicle supply will increase from trade-ins.

"An indicator to watch will be the new-vehicle Consumer Price Index and new-car incentives. If manufacturer incentives drive stronger new-vehicle sales, used-vehicle prices will moderate in the wholesale lanes at auctions."