Used car prices remain high led by certified used more car shoppers

Faced with high prices for new cars, more car shoppers in November turned to the used-car market.

Some of the biggest action came on so-called “certified pre-owned vehicles” — late-model vehicles checked over by dealers and carrying a brand warranty — which posted a 21% increase in the amount that customers actually paid for the cars compared to the same month last year, reports CNW Research.

The average certified used car went for $16,130.

Certified pre-owned models are considered good alternatives to new cars, since they are generally fresh from rental car or corporate fleets, usually three years old or younger and backed by a warranty.

Prices for them remain high because “dealers struggle to get enough of them on the lot,” says Alec Gutierrez, senior analyst for Kelley Blue Book.

Certified used car unit sales are up 10% for the first 10 months of the year compared to last year, says Tom Webb, chief economist for Manheim, a wholesale auction house for used cars. There have been record sales of them in each of the last three years and, he says, the trend is almost assuredly going to continue for 2014.

“The programs have been marketed well,” Webb says. “What people are buying is piece of mind.”

Overall, through the first 11 months of the year, the number of used cars sold is virtually unchanged from the same period a year ago, CNW says, which makes activity on certified used cars all the more impressive.

However, they are just one piece of a used-car market in November that was strong both in activity and price, he says.

Overall transaction prices for used cars are up 15% this year when sales both though dealers and private parties are taken into account.

As the economy continuing to gain strength, low-mileage pickup trucks have been among the strongest performers, commanding high price at auction due to their short supply. Most are work trucks, needed by construction and other workers who need them.

“These trucks are doing really, really well” in the used market, says KBB’s Gutierrez.

SUV sales are also strong and, by contrast, low gas prices are turning midsize and small sedans into relative bargains.

Just as some dealer are having to apply discounts to some new cars to move them off the lot, the savings are cascading into the used market. And the price softness has been driven not only by gas, but by more competition as well.

Certified used car unit sales are up 10% for the first 10 months of the year compared to last year, says Tom Webb, chief economist for Manheim, a wholesale auction house for used cars. There have been record sales of them in each of the last three years and, he says, the trend is almost assuredly going to continue for 2014.

“The programs have been marketed well,” Webb says. “What people are buying is piece of mind.”

Overall, through the first 11 months of the year, the number of used cars sold is virtually unchanged from the same period a year ago, CNW says, which makes activity on certified used cars all the more impressive.