According to Webb, dealer incentives remain the one wild card. Despite carmakers doing a better job controlling inventory, an incentive war could drive retail prices, and then used-vehicle prices, down. "If incentives actually become out of control," he says, "it would depress used-vehicle prices."
Webb sees that as unlikely, though. He believes as the economy slowly rebounds, new-vehicle sales and production will follow. Save an abrupt change, the upward trend of new-vehicle sales shouldn't affect the strength of used-vehicle prices. "I lean toward the gradual side," he says. "There will be a healthy increase (in new-vehicle sales) this year, but it will be below normal trends."
NADA recently estimated total new-vehicle sales in 2010 at 11.5 million units. This is a 1.1 million unit increase over sales in 2009.
Even if new-vehicle sales this year exceed all expectations, Webb doesn't think it will work to dampen used-vehicle prices. As long as sales growth isn't achieved through gimmicks or incentives, used-vehicle prices should remain strong. "If you were selling 14 million new vehicles into a market that only wanted 10 million, that would depress (used-vehicle) prices. But if you sold 14 million into a real 14-million market, used-vehicle prices would remain strong."
The bottom line: Consumers hoping for a drop in used-vehicle prices should brace themselves for disappointment. The good news: If you are selling or trading in a vehicle, you may get more for it than you expect.
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