Used Car Prices Have Risen – But Appear To Be Leveling Off

At first glance, it appears alarming that used car prices have risen. According to Edmunds.com, three-year-old used cars currently sell for about 16 percent more than they did this time last year. Typically, used car prices rise 4.6 percent from year to year.

Seems like a big jump until you factor in that prices slumped a bit last year because of higher fuel prices. Some spike could be expected this year. However, this increase is still out of the ordinary. As Edmunds analyst Joe Spina explained in a news release: "The remarkable price increase is easily attributed to basic economic principles: used car supply is down, and demand is up. Why is supply down? In recent years, automakers largely withdrew from leasing and now the effects are starting to kick in, so off-lease inventory is starting to dry up. Also, thanks to relative softness in the new car market, there aren't as many used cars being traded in. Meanwhile, demand is up because many traditional new car shoppers are now considering used due to the economy."

There is some good news, though, if you have waited to purchase a used car. Prices should be stable. As Spina told AutoObserver.Com, "Barring any other atypical market forces or dramatic changes in gas prices, we expect that used car prices will be stable over the next few years - which is good news for consumers who plan to trade in soon."

Here is the breakdown by segment with the price increase in percent from Oct. 2008 to Oct. 2009:

• Standard Compact:13.5%
• Premium Compact: 1.3%
• Midsize: -1.6%
• Standard Sport: 4.7%
• Premium Sport: 19.5%
• Fullsize: 12.7%
• Standard Luxury: 15.9%
• Premium Luxury: 22.9%
• Compact Pickup: 7.3%
• Fullsize Pickup: 26.2%
• Mini SUV: 7.8%
• Midsize SUV: 25.4%
• Fullsize SUV: 7.8%
• Luxury SUV: 14.4%
• Mini Van: 27.1%
• Fullsize Van: 3.0%