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Friday, March 24, 2017

Cheaper Used Cars Bad Sign for Automakers, Dealers

The nation’s largest car dealers have skidded this week after Ally Financial (ALLY) rekindled forecasts for weakening used-car and lease prices.

While good for car shoppers, a decline in used-car prices is a bad sign for dealerships, which typically see better returns on used vehicles versus new ones. Limited supplies have driven up prices in recent years, but analysts have warned that used vehicles would increase in number as leased vehicles are returned to dealer lots.

Since 2015, consumers looking for lower monthly payments have leased new vehicles at a record pace. Many of those cars, trucks and SUVs that were leased at the start of the recent U.S. sales boom are now reaching the end of their terms.

Ally, the former finance arm of General Motors (GM), noted in a presentation this week that full-year earnings growth would fall short of expectations, citing the anticipated price drop for used cars. The used-vehicle price index from the National Automobile Dealers Association posted a 3.8% decline in February compared to the prior month. NADA also said wholesale prices fell 1.6%.

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6 comments:

Anonymous said...

Crooked industry brought it upon themselves. I have no sympathy for any of them.

Anonymous said...

Nothing crooked going on. Just business cycle.

Anonymous said...

So a very affordable pre owned vehicle market is bad? For whom?

Zorro said...

buy at the car store.....see how many days it drives.....What a F'in joke

Steve said...

Look around at the cars driving around today in MD,, Salisbury at least keep an eye out for the 2nd digit of the tag being a "C". ALL those cars have new registrations in the last 4-5 months, and it's like 15-20% of the cars out there! Sales new and used are blasting since Trump won the election!

I'm feeling great about the next 8 years!

Anonymous said...

9:51 How's that trumpcare ins. you just didn't get?