If your car is getting old — I mean more than eight years old — now is a good time to unload it.
While there are plenty of relatively new pre-owned cars on the market, auto dealers and their less well-heeled customers are having a hard time finding more affordable used cars.
So prices that dealers are willing to pay for older cars and SUVs are rising.
The reasons are two-fold. For one thing, people are keeping their older cars and SUVs even when they buy a new one, said Ivan Drury, an industry analyst with the automotive Web site Edmunds.com. That’s thanks to an improving economy and cars that are more reliable.
Additionally, there’s a particularly low supply of vehicles about eight or nine years old because, starting in 2008, the United States suffered an historic recession that crushed new car sales, said Larry Dixon, a used car market analyst with J.D. Power and Associates.
Fewer new cars sales back then means there are fewer used cars to sell now.
There’s is also a short term bump in demand for used cars around this time every year, said Dixon. This is when folks start to get their tax refunds and many of them put that money toward a new — for them, at least — used car.
The average price paid for a used car went up 3.4% between 2015 and last year, according to data from Edmunds.com, a trend that has been fairly consistent since the recession.
But, during that same year, prices for 9-year-old used cars rose 8.4%. Increases are even sharper for SUVs and crossovers around that age.
The real opportunity for car dealers lies in vehicles that are in good condition that can be sold for less for less that $ 10,000, said Rob Smith, vice president of the Washington, D.C.-area Fitzgerald Auto Mall dealer group.
“I have 165 cars in that range to divide up among 15 stores,” he said. “That’s not enough.”
Even older cars that can sell for around $ 5,000 are particularly desirable, Smith said. Vehicles like that never stay on his used car lots for long because there are always customers who just want something — almost anything — they can drive.
In fact, values for 15-year-old cars rose 14.4% last year, according to Edmunds.com.
“There’s a real need for standard point-to-point transportation,” said Drury.
The upshot: If you have an older car in good shape you should expect to hear from your neighborhood car dealer.
He’ll want to buy your car because he probably already has customers looking for something just like it.
“Particularly if it’s well-maintained, if it’s been cared for and the mileage is reasonable,” said Dixon, “Those are the type of vehicles dealers will pay top dollar for.”