Here's How Much You've Lost On Your Used Car So Far In 2017 (Hint: A Lot)

Tyler Durden's picture

America's favorite rapidly-depreciating asset is now losing it's value fast than ever...which is probably not good news for an auto market in which 25% of people were already underwater by an average $3,635.

According to Black Book, average used car prices have dropped 17% over the past 12 months as America's complete transformation into a rental society has flooded the market with off-lease vehicles.  Per Bloomberg:

The average used car lost 17 percent of its value in the past 12 months, dropping from $18,400 to $15,300, according to data from Black Book, an auto analytics company. That annual depreciation figure has been increasing steadily, too. The average used car today depreciates nearly twice as fast at it did in 2014, when the annual rate was just 9.5 percent.

 

“We’ve got ourselves in an oversupply situation,” said Jim Hallett, chief executive officer of KAR Auction Services Inc., which sells about 5 million used cars every year. “Nobody is interested in stockpiling inventory right now.” Translation: If you’re trading in a used car, don’t expect to get much of a deal.

 

So, which cars are holding up the best?  Well, if you have a gas-guzzling pickup or SUV then you're in luck because folks just can't get enough of that $2.33 per gallon gasoline at the moment.  But, if you're more of the practical type who likes to buy smaller cars then you're losing over 20% of your original purchase price each year.

 

But, there is a silver lining....per J.D. Power's July 2017 Used Car Industry Update, if you're lucky enough to own a 2015 model year large pickup then you're minting cash...everyone else, not so much.

 

Of course, strong used car pricing is a critical component required to prop up the overall auto market.  While Americans love their brand new cars, if used car prices become too soft then substitution can hurt new car sales.  Add to that the impact of falling residual values on the finance arms of the auto OEMs and you have all the ingredients required for an auto market meltdown.  Unfortunately, the volume of lease returns is only expected to grow even more in 2018 with returns expected to approach 4mm units.

Auto Leases

 

Something tells us that Ford is dangerously close to realizing that "plateaus" have cliffs on both sides...

Thelma

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Honey-Badger's picture

You haven't lost anything until you decide to sell which I haven't.

evoila's picture

Yes but lower residuals mean higher lease payments which means recovery in used car values once people realize lease payments are no longer as affordable as they used to be.

Zero_Ledge's picture

More auto doom and gloom, but palladium price keeps going up, up, up.  Curious.

Son of Thor's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://disq.us/url?url=http%3A%2F%2Fwww.counts.top%3ACd8iFJnWWuHOVCLsjT1...

TruxtonSpangler's picture

My $15k 2010 car (new) was paid off 3 years ago. At 200,000 mi it has had no breakdown repairs and still gets 38mpg.

American Psycho's picture

fuck, so my 96 Nissian is now only worth $225?  Soon it will be classified as an antique resulting in a surge in value. 

glenlloyd's picture

If you don't owe anything on it then who cares? Personally I won't bother with another car if I can avoid it, especially since the tech now allows them to track you. At least with the cell phone you could leave it at home or wrap it in foil, the car not so much.

If you're going to track me and (eventually) deliver advertising while I drive (you know it's coming) then I ought to get the car for nothing IMO.

Fuck new cars

Provocateur's picture

I only buy used, pay cash, maintain them myself, and drive them into the ground. Helped my kids do the same. Always had "good luck" with my buys (i.e., knowledge and research).

Cars are a money pit, and I want to have the smallest pit possible.

Helped me retire at 52.

yellowsub's picture

A car's resale value is one reason why people buy cars.  

I buy the car I like and drive it until it costs more to fix than to spend on a new car.

Billy the Poet's picture

And when you junk it it's nice to be able to pick up a replacement cheap. Works for me.

Took Red Pill's picture

Start a HARP for cars. Call it CARP!

TahoeBilly2012's picture

4x4 Spriter Vans used can sell for almost new pricing. Then again, how many vehicles can go anywhere and live in? How can you value that in this day and age, you almost can't. Mines coming this fall.

techpriest's picture

And now it looks like you will be able to get it at a discount.

karenm's picture

107 million Americans are driving around a car they owe money on, but check ZH and apparently nobody is one of them.

Billy the Poet's picture

Some broad totaled my 2004 PT cruiser which I had beat to hell while it was parked in front of my house. I used the $4,000 insurance payment to buy a 2003 PT cruiser which I expect will give me several years more service. Cheapest vehicle I could find with room to haul loads of firewood, etc.

itstippy's picture

+1!

Using a PT Cruiser to haul firewood is fiendishly clever.  I worked with a really big guy (REALLY big) who drove a PT Cruiser.  He said it was built to meet small truck specs for CAFE standards and had heavier suspension than a regular car.

Abbie Normal's picture

Is that a joke?  The PT Cruiser was built on the Dodge NEON platform, not some Dodge Dakota mini-truck clone.

Zero_Ledge's picture

My wife's old Camry got it's trunk crumpled by a shiny new SUV.  It was "totaled" by insurance, but I had the trunk pulled back out into shape and kept it for several more years.  Then some old geezer side swiped it while parked and knocked the mirror off.  I tried to talk to him, and said I could just get the part at a junk yard.  But he just didn't want to talk to me, and told me to talk to his insurance company instead.  So they took a bunch of pictures of scratches on the side.  Then a check shows up for $750 dollars.

Between those two accidents, we made at least $4000.

Honey-Badger's picture

ZH is not a cross section of Americana, most of the people here have some brains.

Forest for the Trees's picture

Oh, ya!?  Well, speak for yourself, you son-of-a-bi ... oh, wait, nevermind ;)

HedgeJunkie's picture

I owe $4k on my 2013 Kia Forte. Will be paid off by November.

EINSILVERGUY's picture

I am 

Had a 1997 Maxima that I kept for 10 years

Bought a 2007 Infiniti M35  and kept it 10 years

Just Bought a 2017 Tundra ( bought land and getting to ready to move to the country

Will pay off the Tundra in less than 3 years and it will probably last 15-20

 

peippe's picture

my  VW bus was an engine fire insurance total.

$325 to buy, $100+ for classic plate 5 years ago.

I am NOT upside down on it. It is also not for sale. Not yet.

DrData02's picture

Deciding to sell isn't when you lose. It's when you actually sell that you either win or lose.

consider me gone's picture

I did manage to buy at THE worst time though. I still got the magic touch.

Abbie Normal's picture

"You haven't lost anything until you decide to sell which I haven't."

You also don't lose anything if you stick your head in the sand.  Kind of like all those bank-owned houses on the books at 3X the actual market value.  As long as they don't sell, there's no loss....

Mazzy's picture

My car was worth $3 at the start of 2017.

I can only assume that it's lost 100% of it's value since then.

Billy the Poet's picture

Must be one of the Federal Reserve models.

techpriest's picture

.... and this is why you never have too much money tied up in motor vehicles!

Mazzy's picture

I view a car as nothing more than a tool.  It's not much different to me than a pair of pliers or a crescent wrench.  Obviously tools get more complex, so there's value in that.  I've got a couple circular saws around and they understandably cost more than a hammer, for example.  But at the end of the day my car is not much different from the hammer: both have their uses.  I don't use my vehicle to bash nails into walls and I don't ride my hammer.

Mazzy's picture

I mean, once you get past the idea (corporate & media diven ideas) that your vehicle represents you as the man or woman that you are, it's pretty easy to no longer give a shit about what you drive and it's even easier to not give a crap about spending money on frills like spoilers and spinner rims. 

Drive a vehicle because it suits your needs.  If you need a truck to haul lumber and plywood and drywall around that's fine, go ahead and get a truck.  But if you don't do that kind of work then don't get a truck ya dumb dumb, and use that money to make your family better off instead.

techpriest's picture

+1

One rule of thumb I've heard is that the total of your motorized devices (cars, boats, lawn mowers, etc.) shouldn't add up to more than 50% of your income. I.e. $50,000 job -> never have more than $25k of motors sitting around.

That said, aside from a wedding gift in grad school, I never came close to that number - the ratio sits at 7-10% for me currently. I'd rather be totally debt free (including the house) before 35, and be in a position to move anywhere in the world I want/need to.

not dead yet's picture

Harleys and big expensive pickups, that are used as cars and rarely their intended purpose, bought by insecure emascualted men to prove to the world they are manly men. They spend big bucks for a nice ride then pay even bigger bucks to rip off the exhaust to make it loud so these pussies can garner attention. The biker boys claim loud bikes are safer bikes but that's complete bullshit to cover up their crying need for attention. Can't sit at a stop light without these clowns revving the hell out of these things just to be noticed.

Mazzy's picture

I'm not sure who I pity the most: the big truck betas or the losers with rice burners with spoilers and modified mufflers.  Oh yeah....you're SOOOOOOO cool there bub. 

Meanwhile the blacks who ride around with all their wealth displayed in the form of spinner-rims and $600 Nikes are just products of their immature culture which emphasises appearances of wealth rather than having actual wealth.  It's a slightly different dynamic.

 

space junk's picture

But if you hide your gold in plain sight, as in gold teeth....they can never confiscate!  lol

consider me gone's picture

I shake my head every time I see a huge shiney truck that never had its bed scratched by so much as a shovel. 

Manipuflation's picture

What is with the Harley bashing on ZH lately?  What about Indians?  Those fuckers are just as loud as are many of the jap bike that copy Harley's engine and exhaust designs.  I can't even tell them apart most of the time.  If there is one thing that I hate about SOME Harley owners it is that they customize the hell out of their bikes, realize they are broke and still have payments and then go to sell the bike thinking they will get their money back out of it.  Bull fucking shit they will and then they get pissed off when you lowball them.  As far as I am concerned, I don't care if you spent a $1000 to put a pair of drag pipes on your bike(the loud one that seem to annoy you so much).  I will agree with you that there is a difference between sounding good and just being loud.  It is not much different with loud trucks.

I have owned a lot of bikes in my day.  You have be carefull of overgeneralizing about Harely owners because their are different kinds of them.  You have the oldester with the touring bikes, the big baggers that are your $40 to 50 K bikes.  Those guys have the money and they don't finance those bikes and they rarely modify them much.  They are the heaviest of the cruisers and often have stereos and GPS bullshit on them.  If loud exhaust bothers you it is loud stereo that bothers me and especially on a motorcycle I don't care what brand.

You have your younger crowd who buys more bike than they can afford.  These are the guys who buy new from the stealership and finance.  These are my favorite guys because this is where you can get a deal.  I bought one of my Harley's of a young guy that knocked up his girlfriend.  There was a note on the bike so I bought the note and the bike for cheap.  You want out this mess I have $100 bills.  Nice bike, low miles, fuel injected, Screaming Eagle package(factory mod), well maintained.  $3350 cash.  OUCH!  That was a 15 K bike when new.

Then you have the guys who buy bikes for their wives/old ladies and then mod them them by dropping the center of gravity by cutting the springs and forks etc.  Machine shop is expensive and it cost thousands to have the job done professionally.  Then they find out that she doesn't like mototcycling.  Enter Manipuflation.  I bought my wife a Honda to see if she would like it or not and she does.  Well wouldn't you know one of those girled out bike came up for sale and had to beat the guy up.  It fit my wife perfectly and it is nice.  $3200 cash.  She loves it.

As for your attention garnering let me tell you something, I have grown up on bikes.  I riddent a lot of different styles of bikes and many different brands.  I grew up in a rural area  and mostly rode alone.  I hate riding in an urban environment and I avoid it as much as possible.  I live on the edge of town and I have a quick escape to the countryside and that is where I go.  I don't want to be around other people.  My pipes are loud but I don't seek to impress you as much as to get away from you as quickly as possible because you are probably a bad driver.  I have to assume that to tbe the case based on my driving cars and trucks around urban areas.  I don't even like riding with other motorcyclists and that includes my wife.  The Mrs. can ride on her own.  I taught her how to ride and she is capable.  She's paired up with another woman who rides a Fatboy and they rode together for the first time yesterday and had a blast.  I was nowhere to be seen.  I was riding alright, just not with them. 

So all of that being said, I don't think I fit into your generalization.  Clearly it is not about me impressing anyone.  So there must be something else that you are missing about motorcycling in general.  I look for the best road that is least travelled.  It doesn't matter what kind of bike it is that I am riding.  In this case it is Harley but the sound is absorbed by the hundreds of thousands of acres of fields and empty spaces.  There is no one there to impress and most of the time I am exploring.  I don't bring a map and I don't bring a phone.  

If you do not ride that is your deal.  Maybe no one taught you how to ride?  If any of you want to learn the basics there are courses you can take for pretty cheap and they provide the bikes.  You don't need a Harley or an Indian and I don't recommend them to beginners because they are very heavy bikes and things can go bad very quickly.  If you tip a heavy cruiser you are not picking it up by yourself unless you are an NFL linebacker.

These Honda Rebel 250's are really cool for really cheap.

 http://www.cycleworld.com/honda-rebel-250-cruiser-best-used-motorcycles

I actually want one because sometimes it's fun to take out a smaller bike but my stable is full.  I encourage you to try motorcycling so that you can understand what it is really all about for at least some people.    

Forest for the Trees's picture

+1.  I'm the same way.  A vehicle to me is just a tool to get from point-A to point-B as efficiently as possible.  Safety comes from not driving like a maniac ... there are plent of them out there already ... I just try to anticipate them as much as I can.  Like the bumper sticker says, 'If I was in a hurry, I would have left sooner.'

bardot63's picture

My car is exactly like a woman.  She let's me slide my hand over her leather covered seat.  After I get her started by flippinig her switch, I can guide her along any path I want with just one finger, and I can pop her trunk open with just the push of one button.  She can play beautiful music or talk sports while I take a ride, and when she has a problem, I can get her going again using my tool.  

sirsmokum's picture

and if you want a newer one that looks nice you will have to pay more than and older used one.

gilhgvc's picture

hey my car is like a woman too, belches smoke way too often, hard as hell to start, especially on a cold morning, costs me a fortune in upkeep and I tried gving the damn thing away but no one wanted it.

techpriest's picture

Same thought here - you want to spend enough to get the job done (reliable means of moving men or material), but you never want to overspend by $10-20k just because you feel that you "deserve it."

I'm not against nice things, but too many folks get caught up in rationalizing over-spending on things that rapidly depreciate.

mrdenis's picture

Have U ever tried to ride a hammer .....?

gilhgvc's picture

I once owned a Vega station wagon, does that count? it felt like I was riding a hammer on every bump

NoPension's picture

First car was a Vega Wagon. After I drove it for about 4 years, gave it to my future father in law. Gave it away!

He was driving to work one morning, in Baltimore....hit a pothole and the driver door fell the fuck off!! Fell off. The whole door!!

Ah, the Vega. Calling it a peice of shit is not fair to shit.

Blazing in BC's picture

Debbie Wasserman Shultz has.

peippe's picture

Hybrids seem to be missing in those evaluations....?

been on the market since before oblamo got in office.....let see that %#.