Cars & Vehicles Car Buying & Selling & Rentals

August 2013 Used Car Sales Show Strong Growth



CNW Market Research does a good job monthly taking a look at the used car marketplace. Its information is a valuable source of where used car buyers might find good prices on used vehicles.

Based on information from the used car market for August 2013, the best deals appear to be in the used SUV market. You might be able to get something a little bigger than you need - and less fuel efficient - but the penalty in fuel economy might be more than offset by the savings on the price of the used SUV.

According to the CNW research, "The used-car market in August came in at 4.1 million units, up 5.6% vs. the same month a year ago (3.9 million). Passenger cars, as a share of total sales, rose 12.6% with trucks down 2.04%. SUVs were off 16.35%." The drop in trucks is surprising considering how well their prices are doing at auction so that must be a statistical anomaly for August 2013 vs. August 2012.

However, the drop in SUV sales presents an opportunity. And sometimes they can be just as, if not more, fuel efficient. Let's take a look at the costs of a midsize sedan vs. a midsize SUV and factor in fuel costs. According to fueleconomy.gov, a 2010 Hyundai Genesis gets a combined 21 mpg while a 2010 Hyundai Santa Fe gets a combined 23 mpg. Annual fuel cost on the two is $2600 v. $2350.

Edmunds.com says a certified pre-owned 2010 Genesis is going to cost about $22,007. The certified pre-owned price on the 2010 Santa Fe is going to be $19,946. (You're going to have trouble finding three-year-old used cars that aren't certified.) Your best move is probably going to be the used Santa Fe even though it might be bigger than you were looking for in a used car thanks to the softer used midsize SUV market.

One thing to take into consideration is you're not going to find many bargains on the certified pre-owned used car lot because franchised dealer sales continue to be strong. (Franchised dealers sell new cars as well as used cars. For example, a new-car Chevrolet dealership is the only place to buy certified pre-owned Chevrolets.) Sales at franchised dealers were up 4.47% to 1.55 million. Independent dealers were up 4.96% to 1.39 million. A surprising gain came in the sales between private individuals, which are called private party casual in industry parlance. They rose 7.8% to 1.14 million. That could be a product of the economy.

It's maybe also a product of summer time, when casual sales tend to rise, and back-to-school when parents are looking for bargains for their children to drive to either high school or college. Those back-to-school prices are indicated in the average transaction action price of private party casual sales. According to CNW, private party transaction prices were up 1.03 percent to $7,069 compared to $6,998 a year ago. Independent transaction prices slipped 0.23 percent to $7,070 from $7,086, which makes them comparable to private-party sales (more on that later). Franchised transaction prices rose to $13,146, up 3.9 percent from $12,656 a year ago. That's an indication of the increasing demand for certified pre-owned used cars, which are always more expensive and profitable.

Overall, observed CNW, transaction prices of all three parts of the used car market combined was $9,371, up 1.93% from last year's $9,193 a year ago bringing the total value of the used market in August to $38.257 billion, up 7.59%.

The number of used cars financed climbed 16.55% to 68.98% of total used sales. That's an interesting statistic and more likely demonstrates the influence of franchised dealers. Less and less people are able to afford to pay cash for their used cars, which means more people taking on debt to pay for their transactions. It's also a reflection of the ease on credit, too.

Newspapers -- both print and electronic -- slipped nearly 8% as a driving force to getting people into a dealership with the Internet rose 130%. The Internet's affect on newspaper classified advertising has been most responsible for the decline in newspapers across the country. I'm an old newspaperman but I obviously now embrace the Internet as the best source for used car information.

The search for a used vehicle fell from 4.1 weeks in August last year to 2.9 weeks in August of this year. That's also a by-product of the urgency to buy used cars before the summer ended for reasons cited above.

Finally, share of sales that were Detroit-automaker products slipped to 58.2% from last year's 59.6%. Asian share rose to 35.8% from 31.3%. Filling in that gap would be European automakers like Audi, BMW, and Mercedes.

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