Used car values remain high but maybe not for long

Some used cars were worth more than their new brethren back in June, and while the value of pre-owned vehicles peaked that month, costs remain high. The NADA Used Car Guide reports that trade-in values of small cars that will be 10 to 30 percent higher in August than they were at the beginning of the year

“Car owners still have a lot of equity built up in their cars, which puts them in a better financial position to make a down payment on a new vehicle,” said Jonathan Banks, a senior analyst with NADA Used Car Guide. “We expect prices on used cars to drop slightly as consumer demand for new cars increases with the arrival of the 2012 model year.”

Average values of midsize and compact cars were 13 and 18 percent higher, respectively, in June than they were in January 2011, NADA reports. However, the overall market dropped 1.4 percent in June due to a decline in large truck and SUV sales that was caused by rising gas prices.

Large pickups and SUVs are gradually starting to regain market strength, according to Auto Re-marketing. Between June and July, pickup values increased 0.2 percent and SUVs were up 0.6 percent, but sales of gas-guzzling vehicles are generally low in the summer months anyway.

As older car values drop, this could be a good time for consumers to consider bad credit car loans for used vehicles. Not all vehicles ware expected to drop in value – NADA predicts that the Toyota Prius will be worth 30 percent more in August than it was in January, the Chevy Aveo will be up 21 percent and the Nissan Versa will see 16 percent value improvement.

The decline in trade-in values of cars that are less than five years old is due to a stable trend in gas prices and the high expectations for new vehicle inventory, especially from Japanese automakers.

Currently, new vehicle inventories at Toyota, Honda, Lexus and Nissan are holding at half or less of normal inventory levels, but full production at Japanese factories is expected to resume in the fall, The Bellingham Herald reports. Once Japanese car dealers have more new vehicles available, it is likely that used car values will fall further.