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In a report Thursday, Edmunds auto industry analysts predicted that a sudden halt in demand for vehicles, coupled with economic uncertainty, will lead to an initial “knee-jerk” drop in used car values. During the 2008 recession, for comparison, 3-year-old vehicles lost about 10 percent in value.
“Recessions aren't kind to used values,” Ivan Drury, Edmunds' senior manager of insights, said in the note. “With shelter-in-place mandates expected to continue through at least May for most of the country and no clearly defined end to the pandemic in sight, we can anticipate a trickle-down effect on the used market.”
To provide an idea of how driving trends have changed, auto-data firm INRIX conducted real-time analyses of anonymous in-car and smartphone data.
On March 18, speeds on the highways around New York City, one of the country’s most congested cities, were more than 50 percent higher during the morning commute and 60 percent higher in the evening compared to the average speeds during the past three or four months.
Similar patterns have been seen in Seattle, suggesting fewer people are driving.
The analysis found that shoppers looking who want to purchase a used vehicle will find some bargains, but those who are planning on selling or trading-in might get lower-than-normal offers.
There is good news, however. Used values are expected to remain low in the near-term, so they could stabilize as businesses reopen, events are rescheduled, people start traveling again and the economy begins to turn around. But they may not rebound completely because most vehicles steadily lose value as they age.