Used car prices to go up in North America

By: Drivers.com staff
Date: Thursday, 23. April 2009

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A new report just released by Scotia Economics, a division of the Bank of Nova Scotia, states that retail leasing of new cars and light trucks peaked in North America in the late 1990s but has dwindled in recent years. The result will be a shortage of used cars over the next year and consequently higher prices.

"Retail leasing of new cars and light trucks peaked in North America in the late 1990s, but has dwindled in recent years--especially since the introduction of 0% financing on new vehicles in late 2001," according to Carlos Gomes, Scotiabank's auto industry specialist.

The pick-up in used car prices is reckoned to be a very positive development for the auto industry, since rising used-car prices are a leading indicator of new vehicle sales. The increased value of trade-in vehicles makes it easier for potential new car and light truck buyers. It also reduces the credit risk for automotive finance companies and other financial institutions--a big concern plaguing the industry in recent years, especially in the United States.

Prices of used full-size and compact cars are posting the strongest gains in the United States--more than 12% above a year ago. In contrast, prices for light trucks--especially full-size SUVs--remain soft due to sluggish demand caused by high gasoline prices. In fact, the more fuel-efficient CUVs are the only light truck segment posting double-digit price gains.

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