Buyers move to used vehicles as new autos hit record prices

THE average sale price of a new vehicle hit a record of just over $39,000 late last year, a figure that chased many buyers out of the market and into used vehicles, which could set a sales record.

The shift to used, aided by millions of late-model vehicles coming off two- and three-year leases, is good for consumers who can get well-equipped cars, trucks and SUVs for far less than new ones. But it could be bad for automakers, with many industry analysts expecting new-vehicle sales to fall in 2020.

Consumers bought an estimated 40.4 million used vehicles last year, likely passing the old record of 40.2 million set in 2018, according to figures from the Edmunds.com auto pricing site. The lower prices make late-model used vehicles more attractive. Last year, Edmunds estimated the average used vehicle cost $20,533. A 3-year-old one cost an average of $22,571. Borrowing $20,000 for six years would cost an average buyer about a $340 monthly payment.

Price isn’t the only reason buying used is becoming more attractive. Automakers, dealers and sites like Carvana offer used vehicles with warranties and maintenance records, sometimes calling them “certified pre-owned.”

As demand falls, the industry could be forced to increase incentives such as cash rebates and low-interest financing, and ultimately that could bring new vehicle prices down.

Still, forces are working against lower new-vehicle prices. People are still buying SUVs and trucks, which accounted for 69% of U.S. sales last year. Trucks and SUVs generally are more expensive than cars, so that drives up the average sale price.

Automakers are differentiating their new vehicles from even 2-year-old ones by adding more driver assist and safety features as well as bigger navigation screens and other technology, he said.

“All of that is going to force these vehicle prices to continue to creep up,” Chesbrough said. (AP)