When it comes to buying a used car, there are some things that we always need to consider. These are pricing, quality, and overall value (as per the Kelley Blue book). This is especially true in the case of sedans.
Used sedans have become very affordable over the past 5 years, but prices have gone up more recently. In spite of this rise in prices, values remain very attractive. You should not that we are not talking about 10-year old sedans. These values are for vehicles under 5 years of age. This means that now is a great time to buy and sell these vehicles. Not only that, but you can acquire a used luxury sedan at the price of a new entry-level coupe.
The Good and the Bad
Of course, for every good, there is a bad, or so I have heard. In this case, the bad takes several forms. The first is the consistent rise in new car prices across all brands. According to an ABC’s article on this subject, in the past year new car values have risen 3%. Having an average value for a new vehicle at $39,995 means that not everyone can afford a new car. In fact, the majority of people absolutely cannot afford cars with prices like those in the current economy.
Used vs New
As a result, according to yearly statistics of car purchases, the percentage of cars bought new dropped from 44% to 29% in the past year. That goes to show how much of a hit the new car market has had because of a constant increase in prices since the end of the recession.
The second is that gas prices keep rising. According to USA Today’s article, gas prices are steadily rising again with the national average being $2.58 per gallon, which is 58 cents above last year’s prices. In addition, with the SUVs and crossovers consuming more fuel, the value-concerned buyers will look towards used compact and subcompact sedans as preferred options.
The same article notes that dealer auctions sell 3-year old compact sedans at an average wholesale price of around $9,800. This is a lot less than an SUV, which costs $13,000. Though the market is not expected to change drastically if prices hit $3 a gallon, the values of sedans are still rising.
Used Sedan Auctions
A Growing Trend
Another arguably major reason for the sudden surge in sedan prices in the first quarter of 2018, as noted by app.com, is the trend for larger cars. Since 2013, the trend for SUVs and crossovers has been huge. These cars now represent 67% of all new car sales per year. Now with gas prices rising, the new SUV trend has led to a used sedan trend.
App.com also notes that the average price of a 3-year old compact sedan is now almost the same as back in 2013, prior to the rise of SUVs. However, though the average price for a 3-year old used sedan is now around $13,500, that is still very cheap compared to SUVs and trucks of the same age.
Looking realistically at this rise in prices for used sedans and used cars in general, is buying or selling used compact cars a good choice? This depends on your circumstances. Marketwatch.com points out that for those that already own a truck or SUV, trading or selling off their vehicles is not a necessary move to make. Though fuel prices are rising, the outlook does not predict values far above $3.
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Sedans and SUVs
Even so, with the strong trend for SUVs still kicking, selling off your used SUV when you want a new one will still be more lucrative than selling a sedan. However, if you are not too keen on keeping a big vehicle and would prefer a more economical car, now is a great time to acquire a used sedan with all the bells and whistles. Truth be told, gas prices are not expected to drop any time soon.
Moreover, buying a used sedan is a great option for buyers who want to save money. It is possible to buy a luxury sedan with great fuel economy at very affordable prices. This, in turn, will keep more money in your wallet, whether you buy for long-term ownership or to resell.
So, what is the outlook? According to both app.com and ABC, the market for sedans is hot. The market is in favor of the seller, with low supply and the values of sedans expected to keep rising.
Should you find a 3-year old compact or subcompact sedan, you might have a rare chance to grab one for yourself and reap the benefits. In addition, with prices both in gas and new car values rising, there will be a shift. This shift will be from the new car trend and a rise in the used car market. Whether looking for a car for personal use or to resell, the future for used sedans is promising. This fact is true both for the buyer and the seller.