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NADA: Incentives and Declining Used-Car Prices to Boost Auto Sales

MCLEAN, Va. — New-vehicle incentives and rebates as well as declining prices on used vehicles are a couple of factors pointing to steady auto sales as the summer months come to a close.

"The end of summer is typically a good time of the year to shop for new and used vehicles," said Jonathan Banks, senior analyst with the National Automobile Dealers Association (NADA) Used Car Guide.

"Dealers and manufacturers are offering incentives and rebates to sell remaining inventory at dealerships and to make room for new model year vehicles arriving this fall," Banks added.

For consumers shopping in the used-vehicle market, average retail-prices for used cars and light trucks up to five-years-old experienced the greatest monthly decline this year, dropping 3.8% in August, says the NADA Used Car Guide.

"Over the next few months, we expect to see an acceleration in the decline of used-vehicle prices that usually begins as the summer season winds down," said Banks, in the August edition of Guidelines , a monthly report that analyzes trends and pricing information on both the new- and used-vehicle markets.

"New-vehicle incentives and discounts are another seasonal factor that typically results in used-vehicle price declines in late August and September," he added.

The NADA Used Car Guide is predicting used-vehicle prices on average will drop between 3% and 3.5% in September. In monetary terms, a used car worth $12,000 today will drop by more than $400 by the end of the third quarter.

Despite the declines of used-vehicle prices throughout the remainder of the year, prices are still at historically high levels, Banks added.

"While steady price declines are making many late-model used vehicles more affordable to purchase, it's important to note that higher-than-average trade-in values are still providing consumers with built-in equity to get better deals on either a new or used car or truck," he said.

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