The average new car for Americans has become more expensive, and that fact is pushing more consumers to used-car lots rather than new-car showrooms.
The Wall Street Journal reported last Monday that the price gap between a new car and a used car reached it’s widest gap in five years. Yet, demand for vehicles, in general, has remained fairly stable. A plethora of off-lease crossovers, SUVs and trucks has only helped the used-car market gain traction this year as well.
The price gap comes as Americans set a new record for the average price paid for a new vehicle: $36,848 in December 2017. That figure actually shrunk to $35,825 in the second quarter of 2018. Both figures are a stark contrast to the average one-to-three-year-old vehicle. Shoppers perusing used car lots will face prices of $22,489 on average, which is over $13,000 less than a new car purchase. And that’s a major differentiator as consumers think more in terms of “what’s the monthly payment” than “what’s the actual price of the car.”
“When people see the price has gone up, it is sticker shock, especially when people only buy a car every five to six years,” said Brian Allan, a senior director at Galpin Motors chain of dealerships. He added he’s seen more buyers leave with a pre-owned car rather than a new vehicle more often as MSRPs climb.
Even better for used-car shoppers is the bountiful amount of technology found in them. Even a three-year-old vehicle will still house some of today’s modern conveniences such as Bluetooth, hands-free capability, heated seats and more.
But, the industry could be further skewed as automakers work to roll out auto subscriptions. Rather than leasing or purchasing a car, subscriptions offer consumers flexibility and no long-term agreements. Cadillac was first with Book by Cadillac, but GM has also filed a trademark for “DriveScription.”