Used-car prices going down as new-car values rise

How much less or more you'll be paying for a car depends on whether you're buying new or used.

It's feast or famine in the automotive market in terms of the direction of selling prices, because while new-car prices are going up, costs are on their way down in the used-car segment, according to the results of newly released polling.

In July, among used cars eight years old and under, wholesales prices decreased by 2.3% from June, according to recent data published by the National Automotive Dealers Association, the largest monthly drop in 2016 so far.

Subcompact used-car prices drop by nearly 4%

The slippage of prices was even more significant among specific segments, including subcompact, mid-size, and large. In each, prices fell at a higher rate than the national average, none more so than for subcompact, down by almost 4%. This is one of the more popular segments among buyers today, thanks to their affordability and superior mileage.

"Used subcompact car prices fell by an average of 3.9% [in July], explained Jonathan Banks, NADA Used Car Guide Executive Analyst. "That's the largest segment decline this past month."

He added how price trends in July were reflective of 2016 as a whole, especially when comparing passenger vehicles with trucks. Banks noted that for the most part, used cars are selling for cheaper prices than trucks, with large pickup prices down by only 0.5% in month-over-month.

While used car buyers were able to purchase in July at a more affordable price than they would have if they'd gotten off the sidelines sooner, it was just the opposite for new-car shoppers during the same month. The estimated average transaction price for all-new automobiles in July totaled $34,264, according to vehicle valuation firm Kelley Blue Book. That's up by around $82 from June and $832 compared to the same 31-day period in 2015.

Interestingly, unlike the used car segment, where the most sizeable drop in costs was for subcompacts, the biggest increase in new-car prices was for sports cars, the report said. On a year-over-year basis, MSRP rose by more than 7% in July, costing buyers an average of $30,732.

Tim Fleming, Analyst, indicated that it should be interesting to see how the cost dynamic between used vehicles and all-new automobiles affects consumers as 2016 winds its way to a close, noting that he wouldn't be surprised if buyers met somewhere in the middle and bought pre-owned

"As the price gap to late-model used cars increases, more shoppers may turn to the pre-owned market for their next vehicle," Fleming forecast. "[This] could mark a big departure from the new-car sales growth the industry has seen during the past five years."

Summer of deals for new cars

That's not to suggest that aspiring new-car owners will be unable to find a vehicle at a price they can afford. Jack Nerad,'s Executive Editorial Director and Executive Market Analyst, noted that because automotive dealerships are preparing for next year's models – many of them already on showroom floors – summer sales events are pretty customary.

"August is a great time to strike a deal on a new 2016 model-year vehicle, as dealers are in the height of the summer sell-down preparing their lots for the coming onslaught of 2017 models," Nerad advised.

For example, Ford Motor Co. is selling 2016 Focus models for an MSRP of $19,390 at 0% financing plus $3,450 in cash-back rewards, reported. Luxury models are also selling for less than what they typically go for during other times of the year, including Lexus and Cadillac.