Saturday, June 23, 2018
Business

Used cars aren't as cheap as they used to be

You can save money by buying a used car, but their prices have been high over the past few years due to two factors: the number of new cars sold and the age of new-car trade-ins.

According to Ricky Beggs, editorial director at Black Book, which provides vehicle trade-in valuation, 60 percent of new-car sales involve some sort of trade-in. The more new cars sold, the greater the number of used cars.

From 1998 to 2007, annual U.S. new-car sales never fell much below 16 million units. But in 2008, sales fell to 13.4 million, and to 10.6 million in 2009. Things improved slightly for 2010, when 11.7 million units were sold. Sales have gradually rebounded, with 2013 new sales breaking the 16 million mark for the first time in six years.

The dearth of new-car sales over the past few years has slowed used-car depreciation, according to Beggs. Before the recession, on average, used cars lost between 15 and 18 percent of their value annually. Last year, prices declined by 12.8 percent. For the coming year, Beggs is forecasting that figure will be 13.5 percent.

Before the recession, the average trade-in was between 2 and 5 years old, according to Black Book. After the recession, the average trade-in was between 8 and 11 years old. This led to a shortage of late-model used cars and high prices. In fact, in the past couple of years, prices for some used models were so high, it was cheaper to buy them new than used.

Given this past year's brisk sales pace, prices should ease in the coming year. But some segments will depreciate less than others. For example, don't expect any bargains if you're considering a compact pickup truck. Black Book predicts this segment should have the highest residuals of any segment after 36 months. Similarly, full-size pickups should hold their value well, Beggs said.

Other vehicles that should hold their value well: compact crossovers, such as the Honda CR-V, Toyota RAV4, Chevrolet Equinox and Ford Escape; and compact SUVs, such as the Jeep Wrangler and Nissan Xterra. Their popularity stems from their size; despite their category, these vehicles are no longer compact.

However, Beggs is concerned that entry-level cars might depreciate rapidly since all manufacturers are rushing to meet stricter federal fuel economy standards. Meanwhile, many midsize cars have been redesigned in the past two or three years and, while they have grown in size, they also have improved in fuel efficiency. The difference in price — about $2,000 — is not enough to prevent buyers from choosing a midsize car over compact or subcompact. As a result, many new subcompact and compact models have huge incentives to stoke buyer interest, which is crimping residual values.

Looking ahead, Beggs predicted another year of 16 million new-car sales. If that holds true, look for used-car prices to ease even further over the next year or two.

Comments
Tampa Bay workforce development initiative looks to Houston for lessons

Tampa Bay workforce development initiative looks to Houston for lessons

The biggest hospitals in Houston had a problem.To earn a prized institutional certification, they needed more nurses with bachelor of science degrees in nursing.But local colleges were more focused on turning out nurses with two-year degrees who, to ...
Published: 06/22/18
Health care IT company CareSync shuts down, laying off 292

Health care IT company CareSync shuts down, laying off 292

TAMPA — The days ahead were supposed to be bright.For weeks, the future of health care tech company CareSync had been thrown into question as founder and CEO and founder Travis Bond unexpectedly departed, kicking off multiple rounds of layoffs. But t...
Published: 06/22/18
Coal and gas hold onto their share of electricity production, despite massive push for renewables

Coal and gas hold onto their share of electricity production, despite massive push for renewables

Here’s an intriguing set of facts: Coal produces the same percentage of the world’s electricity as 20 years ago. Oil and gas remain about level, too.Same for nonfossil fuel sources. In other words, the massive push towards renewables over the past co...
Published: 06/22/18
Brink: Why have Florida’s working-age men left the labor market in droves

Brink: Why have Florida’s working-age men left the labor market in droves

A cancer lurks within Florida’s otherwise rosy job numbers, one that’s been called a quiet catastrophe and an intractable time bomb.Too many men between the ages of 25 and 54 have stopped working.Economists call those the prime-age years. Incomes gen...
Published: 06/22/18
Pride divided no more: St. Pete Pride comes back together

Pride divided no more: St. Pete Pride comes back together

ST. PETERSBURG — The 16th annual St. Pete Pride Parade is getting ready to march along the downtown waterfront the second straight year. But many hope to move past the division caused last year when the parade was uprooted from its original hom...
Published: 06/22/18
For sale: A Tampa Bay area elementary school where you can eat tacos and buy wine

For sale: A Tampa Bay area elementary school where you can eat tacos and buy wine

ST. PETERSBURG — For sale: a 104-year-old elementary school with restaurant and wine shop. It even has a title company where you can close the deal.Less than a year after completing a major renovation of the historic North Ward school, developer Jona...
Published: 06/22/18
Domain Homes: Buyers love them, some others don’t

Domain Homes: Buyers love them, some others don’t

TAMPA — When the 2008 financial crash brought down the nation’s housing market, hundreds of home builders went out of business. Among them was Sharon McSwain Homes in Atlanta, forced to liquidate in 2009.But just as developers like to develop, builde...
Published: 06/21/18
Updated: 06/22/18
Armature Works developers sue Ulele and city of Tampa over use of nearby building

Armature Works developers sue Ulele and city of Tampa over use of nearby building

TAMPA — Two of the city’s hottest developers — the companies behind Ulele and the Armature Works — are heading to court over control of an old city building that sits between the hit eateries. Both want to redevelop the city&...
Published: 06/21/18
Orlando airport first to scan faces of U.S. citizens on international flights

Orlando airport first to scan faces of U.S. citizens on international flights

Associated PressFlorida’s busiest airport is becoming the first in the nation to require a face scan of passengers on all arriving and departing international flights, including U.S. citizens, according to officials there. The expected announcement T...
Published: 06/21/18
Saboteur or whistleblower? Battle between Elon Musk and former Tesla employee turns ugly, exposing internal rancor

Saboteur or whistleblower? Battle between Elon Musk and former Tesla employee turns ugly, exposing internal rancor

Hours after Tesla had sued its former employee on charges he had stolen company secrets, and days after chief Elon Musk had called him a saboteur, the Silicon Valley automaker made a startling claim. The company had received a call from a friend of t...
Published: 06/21/18