Increased Sales In New Cars But Decline In Prices For Used Cars

Many people have always been attracted to used cars because of their low prices but surprisingly, dealers of used cars are now suffering from the first significant price decline since 2008. New vehicle sales are going stronger because of increasing demand. In the United States, new car and light truck sales are on the upswing with 1.5 million vehicles sold last April, a 3.6% increase from last year’s figures.

The US market is not the only one with increased car sales because Europe sales are also steadily rising including markets in the Asia Pacific region. Detroit Three has reportedly earned $6.8 billion in combined operating profit from its North American sales in the first quarter of 2016 while Japanese car makers are also enjoying sizeable profits from its US operations.

On the other hand, NADA Used Car Guide reports that used car prices will fall by 5% to 6% this year because of the rising supply and not due to falling demand. However, the price decline in used car prices is offset by new car sales. Low fuel prices, favorable credit terms and a strong economy continue to bring in the profits for car dealerships. In spite of the number of information contrary to the claims of the government, the US economy continues to grow.

Fuel prices are at $2 per gallon average nationwide. Car buyers are no longer concerned about fuel efficiency and they are now buying pricier trucks and SUVs. They are also gravitating towards more spacious vehicles instead of passenger cars. Car manufacturers are profiting from the shift in customer interest so that sales of SUVs and trucks have climbed by 11% in April. Typically, sales of new cars would peak during spring when the weather becomes better but car dealerships enjoyed early sales since the Easter holiday.

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