Used Car Sales Are the Best They’ve Been in Years

For 2015, the sales of Cincinnati used cars were the best they’ve been in years. Last time the market saw numbers like this was back in 2007, with less than 4,000 additional cars sold. According to the 2015 Used Vehicle Market Report from Edmunds.com, there were 38.3 million used vehicle sales industry-wide, which is the best total in eight years. The reason behind this sudden explosion of used car sales? According to Jessica Caldwell, the industry analyst at Edmunds, it’s thanks to leasing.

But let’s go a little deeper and explore why used car sales hit such big numbers in 2015.

The Numbers

In 2007, used car sales totaled only 4,000 more vehicles than in 2015. When you are getting into numbers that big, taking 4,000 away from 38.3 million is like taking away a penny from a dollar; it’s an insignificant change. Of the 38.3 million sold, 11.4 million were used vehicles sold by franchised dealers, while certified pre-owned car sales hit a land mark. The CPOs sold at a best-ever 2.55 million last year; and the average price tag was $18,600 for a used vehicle — which is a record-breaking price.

With numbers like this, one can’t help but wonder what happened between 2007 and 2015, and why used car sales are just now making a comeback.

Leasing

The amount of vehicles that get leased is hugely responsible for the future sale of used cars on the market. Caldwell says it’s the key factor that drives the modern trends in used car sales today. It brings the younger and higher quality cars back to the market, which means more people will consider used cars as opposed to older vehicles. Because of the gas prices sky-rocketing shortly after 2007, no one wanted to spend money on a new or used car. This means there were less used cars moved, and fewer leases signed.

Since gas and oil has been getting cheaper in recent years, people started buying and leasing vehicles again. In particular, people started buying the more fun, but less-fuel efficient, trucks and SUVs. Just from 2012 to 2013, new vehicle leases saw a spike of 657,949 units, or 25 percent. That means all those vehicles coming off leases hit the market in 2015, which contributed to this perfect culmination of events.

Combined with the drop in gas prices in 2015 and those vehicles hitting the lots, it’s no small wonder used car sales spiked.

What it Looks Like for the Future

Caldwell says that we are in the midst of a “Golden Age for CPO and near-new used cars.” Since there is a record number of lease terminations expected in 2016, we can expect to see a plethora of used cars on the market again — only if oil prices stay where they are or continue to drop, of course. If not, the market might need to endure another drought before used car sales pick back up again.

38.3 million is certainly an impressive number. Based on that number from last year, and the amount of leases that are projected to end this year, it’s fair to speculate that in 2016 we will reach a new record for overall used cars sold.