SANTA MONICA (CNS) - Used car values are expected to decline as the coronavirus crisis continues to take its toll on the U.S. economy, according to the Santa Monica-based Edmunds automotive information site.
According to Edmunds analysts, “a sudden halt in demand for vehicles combined with economic uncertainty will lead to an initial knee-jerk drop in used values, based on historical precedent.”
In the 2008 recession, 3-year-old vehicles lost nearly 10% in value. The year before they declined less than 5% in value, according to Edmunds data.
“Recessions aren't kind to used values,” said Ivan Drury, an Edmunds senior manager. “With shelter-in-place mandates expected to continue through at least May for most of the country and no clearly defined end to the pandemic in sight, we can anticipate a trickle-down effect on the used market.”
According to Edmunds, lower demand, unusually timed off-lease inventory and reduced auction prices are major contributors toward a drop in used car values. And new car incentives from automakers in response to the coronavirus crisis will also further depress prices of off-lease, near-new used vehicles.
Edmunds researchers said used values are expected to remain lower for the foreseeable future. Once the economy begins to rebound, used vehicles are often sought after by consumers looking to save money when the nation is coming out of a recession, they said.
The Edmunds analysts say there's no one-size-fits-all answer for what consumers should do if they're contemplating selling their vehicle right now.
“Personal finances are understandably top of mind for most people right now, so if you're a car owner and you're in need of quick cash, selling your vehicle is still a decent option if you're in a positive equity position or if you have an extra vehicle in the driveway,” Drury said.
“A number of companies provide online trade-in evaluations and instant offers, and many dealerships offer to buy vehicles even without a purchase from their inventory,” he said. “Consumers can get a good idea of what the trade-in market is for their vehicle by shopping around and determining which blend of value and convenience is right for them.”