Are you ready for a used car bargain? Consider a smaller model or a hybrid; Recent auto news reports detailed a dramatic drop in prices for subcompact and similar-sized cars. According to the latest trends report, an entry-level sports model saw a price reduction of around 2.1%, while subcompacts were down 2.8%. Minivans and compacts also fell in price with an overall drop of 2%. Some individual models show drops of up to 12.5% from the previous quarter’s costs, including hybrids; some used models are down as much as 10%.
What’s behind this new price trend for smaller used cars?
While full-size cars, SUVs and trucks are rising in price, buyers are choosing smaller models for a variety of reasons. Falling and stable gas prices made family vehicles and larger trips more attractive. Hybrids also don’t sell as well when low gas prices are in the news. Cars designed for fuel economy have sat in lots for longer periods, leading to naturally lower prices.
Lower prices for smaller used cars are directly related to the uptick in leasing seen in previous years. Most of the vehicles that are priced down are known for their fuel economy and are between three and five years old. The increase in the leasing of small, subcompact and hybrid vehicles peaked in the period between 2010 and 2012 and was directly related to the record gasoline prices registered in those years.
Now that those leases have ended and gas prices are more stable, used cars returned after their lease term ended have now flooded the market, directly affecting resale prices. With recent trends in mind, the price of these vehicles is likely to remain low as more cars enter the used market, making a small model an excellent value for buyers. The current low price trend reflects models that are one to five years old and represents a wide range of brands and styles.
The rule of supply and demand also applies to the used car market. As so many fuel-efficient models hit the market, prices naturally get lower. By contrast, leases of large trucks, SUVs and sporty models that weren’t fuel efficient fell accordingly when gasoline prices rose. Fewer large trucks are now available for resale, resulting in static or even rising prices. The most recent used car pricing models reflect this continuing trend, and it is likely to continue for at least the rest of the year and possibly longer.
The glut of small used cars and hybrids in an already crowded market spells good news for buyers. Consumers looking for a commuter model or a great value in a used vehicle will be able to find a surprising variety of options thanks to the latest trends.