The average retail price of $18,846 for a used light vehicle sold at a franchised dealership in 2014 was up 4.1 percent from 2013 and 14 percent from 2010, according to NADA Data, the National Automobile Dealers Association's annual report on dealership sales and financial trends.
Used-vehicle prices have climbed steadily since about 2011, a byproduct of new-vehicle sales hitting rock bottom during the Great Recession, which in turn tightened the industry's used-vehicle inventory.
NADA Chief Economist Steven Szakaly said that although more off-lease vehicles are coming back into the market this year, pent-up demand from new- and used-vehicle buyers, plus low interest rates, likely will lift average used-vehicle prices again this year -- though probably not as much as last year.
"There are more people entering the market for both new and used cars so you've got a lot of pent-up demand and the supply of used cars is not keeping up with the demand," he said.
"You could see at least another year or year and a half where the buyers entering the market continue to outpace the growth in supply. It's a real possibility."
The average retail price of a used vehicle sold at a franchised dealership last year was 58 percent of the average new-vehicle selling price of $32,618, according to NADA Data.
In 2013, the average used-vehicle price of $18,111 was 57 percent of the average new-vehicle selling price of $31,762. In 2010, the average used-vehicle price was 55 percent of the average new-vehicle price.
Tom Kontos, chief economist at auction company ADESA, said that when the average used-vehicle price gets close to 60 percent of the average new-vehicle price, consumers who straddle the fence between buying new or used vehicles will choose new ones.
He said the average used-vehicle price as a percentage of the average new-vehicle price peaked in June 2014 at 60 percent and trended downward the rest of the year to the mid-50 percent range.
"That tells me that 2014 may have been the peak," Kontos said. "As we look at the same data for 2015 and 2016 and 2017, we'll start to coast down that hill and start dropping back to the mid- to low 50s."
Last year, the average franchised dealership's used-vehicle sales rose 6 percent to $15.2 million, representing 31 percent of total sales, according to NADA Data.
In that same period, dealers acquired two-thirds of the used light vehicles they retailed from trade-ins they took on new- and used-vehicle sales. They acquired another 26 percent from auctions. Both numbers were virtually unchanged from 2013.
NADA's Szakaly said trade-ins are dealers' preferred method of sourcing used vehicles because those vehicles just "show up at the door" and are more plentiful as a result of growing new- and used-vehicle sales.
He also said that many dealerships that buy off-lease vehicles from finance companies when customers turn in the vehicles report those purchases as trade-ins. NADA doesn't track those purchases as a separate vehicle-acquisition category.
Street purchases of vehicles from consumers in 2014 dropped a percentage point from a year earlier to 4 percent.
Vehicle purchases from other sources rose 2 percentage points to 4 percent.