NEW YORK -- Prices for used cars and trucks could fall 15 to 20 percent as dealerships become awash in off-lease vehicles, creating “a big problem for the new-vehicle segment,” auto analyst John Murphy said Tuesday.
A big drop in used-vehicle prices will prompt some consumers to buy used instead of new, explained Murphy, of Bank of America Merrill Lynch. That’s one reason Murphy said he expects new-vehicle sales to start declining in 2018.
Dealerships will have 14.5 million used vehicles on their lots in 2018, 22 percent more than the 11.9 million they had in 2015, J.D. Power data show. About 3.7 million vehicles are expected to come off leases in 2018, a 61 percent jump from three years earlier.
“As all these cars come back, we’re expecting there to be significant pressure on used-vehicle pricing,” Murphy said at the NADA/J.D. Power Automotive Forum in New York.
The glut of off-lease vehicles has been foreseen for several years by auto auctions and others in the remarketing industry, but the issue has drawn increased attention as the days of reckoning draw closer.