Last month, used car and truck wholesale values dropped about 3.6 percent, but the National Automobile Dealers Association's Used Car Guide reports that they're still a full percentage point over where they were in 2006 before the recession.
Lightly used luxury cars less than five years old are up about 2.5 percent as well.
Limited used car supply caused by both a general slowdown in new vehicle sales and the massive Cash for Clunkers scrapping program has artificially inflated values on the second-hand market. The new car market deflated from around 17 million in 2005 to just 10.4 million in 2009, meaning that there are far fewer used cars on the road. In addition, 2009's Car Allowance Rebate System, or Cash for Clunkers, took 690,000 lower-value used cars off the road. While most Cash for Clunkers cars were worth less than $5,000 on the retail market, their scrapping caused a gaping hole at the bottom of the market, which inflated values all around.
One of the largest and most desirable - at least for dealers - segment of the used car market is off-lease models. Cars coming off of leases are usually between two and four years old, so their market will likely remain tight for at least another year or two.
Meanwhile, the Detroit News suggests that new car prices might be on the decline as well, in order to keep the gap with used cars close. That means that incentives and rebates could also be on the rise.
