Used car prices affecting new car sales

April 23, 2012 12:00 AM

Used car prices are continuing to rise, so much so that they are contributing to an increase in new car sales, reports Kelley Blue Book (KBB).

At dealer auctions, the price of fuel-efficient hybrids and compacts rose 10 and 6 percent, respectively, throughout the month of March. However, dealers may have trouble selling these vehicles to the consumer, as the average price of used cars is becoming closer and closer to the price of a new vehicle.

"Consumers have more options than ever before when it comes to fuel-efficient offerings, and many of these vehicles can be leased for less than $200 per month and a small down payment," said Alec Gutierrez, senior market analyst of automotive insights for KBB. "Dealers must keep this in mind as they continue to pay more and more for used compacts at auction. As values rise, dealers will find it difficult to pass along the premium paid at auction to consumers."

Part of the reason used car prices are rising is that vehicles are staying on the road longer. Drivers who keep up with their scheduled maintenance can ensure that their vehicle lasts for quite some time.

Back to news