Learn When to Buy a Used Car Through 2020

Private party sales will continue to rise as prices drop

Honda Odyssey airbag recall
Minivans like the Honda Odyssey will show a deep drop in value in the coming years. (c) Honda

Sales of used cars are expected to continue rising through 2020, including more than 39 million cars sold by the end of 2018, according to Edmunds.com and other auto information groups. At the same time, used car prices are expected to decline through 2020, which means it's a good time to be a used-car buyer but not great if you're a seller.

Rising Sales

Used cars will continue to increase in popularity in coming years, says Jessica Caldwell, Edmunds executive director of industry analysis, who also noted:

“Used vehicles will likely grow in popularity as new-car substitutes if incentives continue to stagnate and interest rates creep up. A large quantity of near-new used vehicles are expected to come into the market that will undoubtedly offer a compelling value message that resonates with discerning new-car shoppers.”

The key, Caldwell noted, is the number of "gently used" or "near new" vehicles on the market. KeyBanc Capital analysts agreed, telling Auto Remarketing, an industry website, that the number "off-lease" vehicles coming onto the market should increase:

“We are anticipating a low single-digit used-car volume increase in 2018, driven by positive unemployment trends and continued improvement in off-lease supply."

Analysts say those numbers are only expected to increase through 2020.

Price Decline

But, there's bad news with the good—at least if you are a used-car seller. Prices of even near-new or off-lease used vehicles are expected to decline, according to RVI Group, which tracks vehicle sales across the U.S., explaining:

“The increasing supply of used vehicles and steady growth of incentive activity will continue to put downward pressure on used-car prices. ... Real used-vehicle prices are expected to decline 12.5 percent from current (March 2018) levels by 2020.”

RVI's main findings were that the increasing used car supply should sweep across all segments and affect prices in a positive way for consumers but in a negative way for sellers, who will face decreases in profits, except maybe at the private sales level.

Price Declines by Segment

Specific segments of the used-vehicle market are going to suffer declining prices as well, according to RVI, which lists predictions for the top 10 segments in terms of price decline as part of its used car price index. (It doesn't include full-size vans, which are typically used for commercial purposes.)

Vehicle Type

Percent Price Decline

Minivan

8.8

Full-size pickups

8.3

Midsize SUVs

7.8

Full-size sedans

7.7

Sub-compacts

6.8

Sports cars

6.3

Luxury full-size sedans

5.6

Luxury small sedans

4.7

Small sedans

3.2

Delay Buying a Used Car

If you're buying a used car between now (April 2018) and 2020, don't expect it to hold its value. Used-car depreciation is not going to be quite as steep as with new cars, but it's still going to be higher than in the past because supply will likely exceed demand, which should still continue to be strong.

If you're in the market for a used car, now may not be the time to buy if you feel you can hold off a year or two, when you'll likely be able to buy the same vehicle for about 10 percent less. So, spare yourself the car payments for a couple of years and you might be able to afford something nicer than you thought.