Originally Posted by AuthorEditor
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As a result, the average monthly payment for a new vehicle continued to climb to a new high of $554 and to a record $391 for used vehicles, according to Experian.
https://www.cnbc.com/2019/06/06/auto-loans-hit-record-high-sending-borrowers-to-the-used-market.html
What I find interesting in these numbers is that used cars are as costly as these figures make them appear to be.
If the spread between buying new and buying used is only around $5.50 day, where are the vast savings to be had in buying used, particularly since you get back at least some of that marginal cost in fuel economy, which improves a bit every year as well as in maintenance and repair expenses that are always closer on any used car than they are on a new one?
Another factor is that the supply of new cars is limited only by demand. Given the glut of worldwide auto manufacturing capacity, supply could be increased considerably.
OTOH, the supply of used cars for sale is finite and those that can reasonably be considered as new car alternatives is but a subset of that total.
If more buyers turn to this limited supply, one need not have been an economics major to grasp that there is but one possible outcome for used car pricing.
Availability of good used cars is inevitably tied to new car sales volumes. We last saw this demonstrated about ten years ago, when new car sales collapsed and the supply of good used cars at reasonable prices dried up.
Quote
As a result, the average monthly payment for a new vehicle continued to climb to a new high of $554 and to a record $391 for used vehicles, according to Experian.
https://www.cnbc.com/2019/06/06/auto-loans-hit-record-high-sending-borrowers-to-the-used-market.html
What I find interesting in these numbers is that used cars are as costly as these figures make them appear to be.
If the spread between buying new and buying used is only around $5.50 day, where are the vast savings to be had in buying used, particularly since you get back at least some of that marginal cost in fuel economy, which improves a bit every year as well as in maintenance and repair expenses that are always closer on any used car than they are on a new one?
Another factor is that the supply of new cars is limited only by demand. Given the glut of worldwide auto manufacturing capacity, supply could be increased considerably.
OTOH, the supply of used cars for sale is finite and those that can reasonably be considered as new car alternatives is but a subset of that total.
If more buyers turn to this limited supply, one need not have been an economics major to grasp that there is but one possible outcome for used car pricing.
Availability of good used cars is inevitably tied to new car sales volumes. We last saw this demonstrated about ten years ago, when new car sales collapsed and the supply of good used cars at reasonable prices dried up.