Car values increasing along with demand for used vehicles & average years on the road
NEW YORK -- Consumers often hear a car loses its value once you drive it off the lot, but that may not be the case anymore.
The automotive research firm Black Book found cars are now holding on to about 10% more of their value after three years than they were during the pandemic.
"Everybody was expecting a big drop, a shatter, an explosion, values to drop when supply came back. Totally didn't happen," Shane Sutherland, who owns the used car dealership Northport Motors, told CBS New York's John Dias.
Sutherland told Dias his company Northport Motors grew tenfold during and shortly after the COVID pandemic, and business is still profitable.
"We are constantly selling vehicles with 80-100,000 miles that are providing excellent value for customers," said Sutherland.
According to data from S&P Global Mobility, the average age of a passenger vehicle is up three months compared to last year -- now on the road for a record 12.5 years -- and it's common to see some people driving cars 20 years or older.
"Your used car is worth that much more at trade-in or to sell it on the open market. But it's a bad thing for people that need to buy a new car right now," said Paul Oster, CEO of Better Qualified.
Experts say it has to do with inflation.
"The costs of goods in all services have gone up, so that's kind of maintained or even increased the values of these new cars," Oster said.
Industry professionals say, for certain consumers, now may be a good time to buy a certified pre-owned vehicle. Or in other cases, buy out your car at the end of your lease.
"If you're in a situation where the current value of your car is actually higher than that residual contract value amount, it's actually pretty straight forward. You should buy out that lease," said Matt Dundas, senior director of finance at Carvana.
Dundas said you can then sell it and make a profit.
Experts add if you're in the market for a car, get a loan from your bank first. A bank will likely give you a more desirable lending option than a dealer.