Used Car Demand Keeps Prices High in First Quarter

By Paul Ausick Updated Apr 28, 9:04AM EDT · Published May 5, 10:25AM EDT

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Sales of used vehicles slipped 6.7% in the first quarter of 2014, from 9.8 million units in the year-ago quarter to 9.1 million units this year. Franchised sales were up 11% at 2.8 million, with the decline coming from private party and independent dealer sales, which were down 11.4%.

The average retail price for a used vehicle at franchise dealers was $16,090, up 1.4% sequentially and up 1.7% year-over-year for the quarter. Even with higher volume, franchise dealers were able to keep the price higher, indicating that demand for used vehicles remains high. The data come from auto industry research firm Edmunds.com.

New vehicle sales totaled about 29% of the market in the first quarter, compared with 71% of sales for used vehicles. That is a sequential rise from 68%, but down from 72.6% in the first quarter of 2013.

The top five auto sales segments by market share are midsize cars (9.4%), compact cars (9.3%), large trucks (7.4%), entry-level luxury cars (7.1%) and midrange luxury cars (6.2%). The leading model by first-quarter sales in each of these segments is:

Midsize cars: Accord, from Honda Motor Co. Ltd. (NYSE: HMC)
Compact cars: Civic, from Honda
Large truck: Silverado 1500, from General Motors Co. (NYSE: GM)
Entry-level luxury cars: 3 Series, from BMW
Midrange luxury cars: E-Class, from Mercedes

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The largest change in market share among the top-selling models came in the entry-level luxury SUV category, where the Lexus RX 350 from Toyota Motor Corp. (NYSE: TM) rose to 10.8% share. All top five categories with the largest positive share changes were SUVs. The RX 350 was followed by the Honda MDX (10.5%), Honda CR-V (5.2%), Chevrolet Equinox (4.5%) and Chevrolet Acadia (3.8%).

The largest quarterly declines in market share came in these segments:

Premium sport car: Mercedes SL-Class, down 16.3%
Large car: Chevy Impala, down 10.8%
Compact truck: Toyota Tacoma, down 10.4%
Premium luxury SUV: Cadillac Escalade, down 8.8%
Midrange luxury car: Mercedes E-Class, down 6.3%

The analysts at Edmunds.com expect new car sales and leasing to remain strong in the second quarter, easing demand for used vehicle inventory. Low borrowing costs and advantageous leasing deals could boost new car sales. For used vehicle sales, Edmunds.com says lower income consumers are staying out of the market during the uneven economic recovery, especially in private party sales and at independent dealers.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.