By: Gov Auctions | 11 March 2014
Declining Used Car Prices Make Former Lease Vehicles Ideal Targets
The prices of used cars are steadily declining. While the prices are surging downward, the decline is noticeable enough that former lease vehicles have become the ideal auto auction target. The big question people are asking is why targeting former lease vehicles if the price of all used cars are dropping? The answer is simple – value and supply.
Lower Used Car Prices Means Fewer People Buying New Cars
As the price of used cars continue to decline, it becomes more appealing for most car buyers to purchase a used car instead of a new one. As a result, used cars which are 4 or 5 years old boast a growing demand which means more companies, lending institutions, and car dealerships will place 4-5 year old cars in wholesale auctions which are rarely open to the public because used car dealers want these cars on their lot. With the growing emphasis on slightly older used cars more 2-3 year old cars feature a lower demand and lower prices. This is why auction-goers should happily pay a little more for a car that is a lot newer.
Former Lease Vehicles Dropped Nearly $1000 in 2013
Ford Motor Company recently reported that the average auction value for its vehicles coming back from a 24 month lease was being sold for nearly $1000 less in 2013 than 2012. This is surprising considering the value of a 3 year old Ford vehicle at auction only saw a price decrease of $150. As the demand for older used cars continues to climb, the price of former lease vehicles will drop even further while 3-5 year old used cars will see only small decreases in price.
Finding the Value
Auto auctions aren’t only about buying the least expensive cars possible. They are also about spending as little as possible while getting as much as possible – this is where value-purchases come into play. Savvy auction buyers can pay slightly more for car coming off a 2 year lease than an older model but receive a much more valuable and reliable vehicle.