New-Vehicle Sales Increase at Expense of Used Cars

- Alec Gutierrez, senior market analyst of automotive insights, Kelley Blue Book

The gap between new- and used-vehicle pricing in many segments has narrowed significantly, with new vehicles, on average, selling for only 11.5 percent more than a comparable 1-year-old used car.   Used subcompact and compact cars only offer consumers an average savings between 5 to 7 percent, while used hybrid cars and mid-size crossovers are within 3 to 4 percent of an equivalent new vehicle.  After factoring in incentives and lower finance APRs on new cars, purchasing a new vehicle is in many cases only marginally more than purchasing used. 

While traditionally shoppers would save thousands of dollars by purchasing a slightly used vehicle rather than new, this is no longer the case, as used-car values remain near their all-time peak, Kelley Blue Book sees new-vehicle sales cannibalizing used vehicle sales. 

During the past several months, Kelley Blue Book has observed a shift in shopper activity from used to new vehicles based on the 14 million visitors to KBB.com each month, as well as new- and used-vehicle sales.  In terms of Web traffic on the company’s car-shopping website, there has been a 5 percentage point shift in new-car shopper activity since January.  Similarly, new-vehicle sales have been increasing consistently year-over-year (increasing 9 percent in July alone), while used-vehicle registrations declined by 4 to 5 percent year-over-year from March through May.

The choice to purchase a new or used car can certainly vary depending on the model being considered.  For instance, a consumer considering a Ford Focus can save as much as $3,000 by purchasing a used model-year 2011; however, the strength of the 2012 redesign may prompt them to spend a little more on the latest and greatest model.  A consumer in the market for a Toyota FJ Cruiser should almost always opt to buy new.  A brand new 2012 FJ Cruiser currently has a Fair Purchase Price of $28,500, a mere $300 more than a used 2011 FJ Cruiser with 20,000 miles.

To assist consumers in identifying those vehicles that may make more sense to buy new, we have compiled a list of 10 new vehicles that are only marginally more expensive than their 1-year-old counterpart.

*Fair Purchase Price reflects value of a MY2012 new vehicle while Sugg. Retail Value reflects a MY2011 used vehicle