Used vehicle prices rose during the first quarter of 2018 as compact and subcompact prices saw healthy year-over-year gains.  - Photo by Eric Gandarilla. 

Used vehicle prices rose during the first quarter of 2018 as compact and subcompact prices saw healthy year-over-year gains. 

Photo by Eric Gandarilla. 

Used vehicle prices in the first quarter reached $19,657, which represented a 2.2% year-over-year increase, according to Edmunds’ latest Used Car report.

Edmunds attributes this rise in used vehicle prices to the increasing supply of near-new vehicles coming off-lease and a greater demand for vehicles of all sizes and ages.

The average price of a 3-year-old compact car rose 3.9% and the amount of days it took to sell fell by 7% in the first quarter of 2018, compared to a year ago. The average price for a 3-year-old subcompact car has increased 3%, and the amount of time its taking to sell these vehicles has decreased by 8.5%, compared to a year ago.

Current fuel prices increases have yet to impact SUV and truck residual values, however, Edmunds does caution that that may change if fuel prices continue to rise.

"Newer SUVs and trucks are nothing like their counterparts from 10 years ago during the gas crisis of 2008; however, they still lag behind their car segment counterparts in fuel economy," said Ivan Drury, senior manager of industry analysis for Edmunds. "For now, SUV and truck segments are insulated from rising fuel costs, but a large spike or steady creep past the $4-a-gallon threshold could spell disaster for resale values."

This risk posed to SUV and truck residual values could also be compounded by the type of off-lease vehicles that will be returning to market through the year and for the few years to come. For the past few years, sedans made up the bulk of off-lease vehicles returning to market.

This year, SUVS, crossovers, and trucks will make up a larger percentage of the type of vehicles returning to market. This could translate to strong wholesale values and used retail prices if gas prices don’t rise too much higher. But should gas prices rise too high for consumers, the negative impact to wholesale values and used retail prices could be high.


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