Used vehicles are consumers’ best defense versus steadily increasing new-car prices. Vehicles are lasting longer than ever as the overall level of vehicle quality and dependability increases. Used cars are a bigger bargain than ever. But how used is too used?
Consumers in some areas favor older used cars
In a just-released study of used-car sales, LendingTree, an online loan marketplace, analyzed auto loan offers for borrowers in the top 50 U.S. metropolitan areas based on population. They discovered that consumers in some areas of the country are more comfortable with older used cars than others are. Nationally the average age of a used car people tried to finance was six years old. LendingTree discovered the average age of used cars financed in each metro, as well as which makes of used cars were most popular.
“We wanted to validate some of the economic expectations and headwinds in the consumer auto market and if it held true for all localized markets,” said Mike Ouyang, marketing lead for auto loans at Lending Tree.
What does the study say about the state of the used-car market?
“The last few years have been great growth for the domestic auto market, but it’s believed 2016/2017 was the peak as pent-up demand for new cars from the post-recession has been mostly fulfilled,” Ouyang told us. “Some earlier new cars sold and leases made during the recovery are now aging out and are being traded back as used cars in the market. This is creating a larger supply in a shrinking demand market. The excess inventory is causing used car prices, and therefore trade-in values to fall.”
New-car prices rise as used-car values fall
That can be a problem. As Ouyang said, “New car prices are increasing from rising production costs, inflationary pressures, and more technological advancement expectations from buyers. So now you have more expensive new vehicles, and lower trade-in values, meaning it will cost buyers more to upgrade. This likely will push demand of current buyers towards used vehicles as they become relatively more attractive offers.”
The study found that consumers in the Northwest are most comfortable embracing older used cars. Residents of Portland, Oregon, sought the oldest cars in the U.S. — vehicles 7.45 years old. Seattle, less than a three-hour drive away from Portland, ranked third nationally with an average car age of just under 7 years.
Salt Lake City was sandwiched between the two Northwest metropolises. It ranked second among cities where people seem to like older used cars. Car buyers in Salt Lake City sought loans for cars aged a bit over 7 years. The heartland of the U.S. Also has a penchant for older used cars, with cities from Denver to Milwaukee financing cars 6.34 years or older.
Florida drivers like their used cars newer
Florida drivers are on the opposite side of the coin when it comes to the preferred age of their used cars. Miami car buyers want used cars under the five-year-old mark, purchasing used cars with an average age of 4.76 years. Orlando, Jacksonville and Tampa follow suit, with the average age not exceeding 5.86 years.
The Texas trio of Houston, Dallas and Austin have an appetite for younger vehicles, according to the study. Houston ranked as the second in the country for drivers seeking younger used cars, with an average age of 5.08 years. New Orleans ranked third among metros seeking newer used vehicles. New York City, with an average used-car age of 5.40 years, placed fifth. Washington, D.C., and Boston ranked ninth and tenth, respectively.
So what do used car buyers buy?
Chevrolet was by far the most popular brand overall. Out of the top 50 metros, it was the most popular brand in 31. Nissan was the second-most popular overall, being favored in 10 out of the 50 metros. Toyota, Honda and Ford also had strong adherents in individual cities.