Prices of recent-model used vehicles will remain high until 2013 due to a shortage, according to Rene Abdalah, vice president of RVI Group, a company in Stamford, Conn. that insures residual values for the vehicle-leasing industry.
Abdalah predicts that the stocks of 2- to 5-year-old used cars and trucks will fall 19% in 2011 from 2010 and that the inventories of those vehicles then will fall 35% more in 2012 and hit bottom in 2013 after a drop of 10% more. He explained that this situation will not be anything that was ever seen before.
During a presentation at the Kelley Blue Book Residual Value Symposium earlier this month, Abdalah said that the used-vehicle prices will be relatively high and dealers will be scrambling to supply their used-car lots due to the shrinkage in inventory, which is a result of declining new-vehicle sales. He said that it will be a “tough situation” for dealers as they’d have to “compete harder to get those vehicles.”
Abdalah expects that because of the fierce competition, new-vehicles prices will go down through subvented leasing and incentives.
And when new-car prices are reduced, it will help moderate used-vehicle prices. Abdalah concluded that while used-car prices will continue to increase, they won’t be as high as what many imagine. [via autonews - sub. required]