February 2016 data have confirmed that used vehicle values are continuing to drop, and fell to their lowest point in three years, according to auto industry experts.
Many in the industry had predicted that overall vehicle value was declining several weeks ago. According to the Financial Times, used car prices fell 1.5 percent in February – far higher than in any month in recent years.
What concerns many people in the industry is that the main issue – vehicle leasing – which caused prices to drop in February is likely to get worse in the next few months, causing vehicle values to plunge even more.
Here’s what’s happening:
In 2013, the number of vehicles leased by consumers soared to record highs. Most of those leases were for three years. This means that people are now returning those cars and trucks to dealerships.
So dealers suddenly have many more vehicles on the lot than usual, forcing them to sell the vehicles for lower prices – and often at a loss. There is no quick fix for that problem. Peak leasing months are April, May and June. Therefore, in those months even more leased vehicles are going to be returned to dealerships, putting further pressure on them to sell their inventory quickly.
September and October are also huge leasing months, so pressure to sell used cars and trucks should push overall vehicle values even lower.
What this means overall is that 2016 is going to be a great year for anyone looking to buy a used vehicle at a low prices. It also means that if you are thinking about selling your car, it’s going to be a very bad time to do so.
If you want to find out an estimate of what your car is worth, you can use our free vehicle value calculator.