Do second hand car prices increase or decrease during a recession?

Answer 1

Im a second hand car dealer and I can assure you that used car prices most definately drop in a recession. The used car market is strongly affected by the level of discount being offered on new cars which will allways increase when times are hard.
As the market slows a dealer will need to retain a greater margin to achieve the same bottom line. This means that the price you actually pay on the fourcourt will probably change very little but the trade price (the figure you are offered as part exchange ) will be less.
The trade tends to have its own cycles of boom and recession that often defy the national trend but this year has been very slow and this is the quietest time of year. As the market is down at the moment you are probably going to get a pretty sharp deal on the car you buy but if you are selling I would shut up shop untill at least January.

Answer 2

intuitively, i'd say they drop. for the simple reason that i can't see anyone raising prices in a downturn.
I think what the question may want you to think about is whether second hand cars are a normal or an inferior good.
if you are poor you will spend more of your income on used cars as you get richer. so during a recession, demand would fall.
if, on the otherhand, you are quite rich, you will spend less on used cars as you get richer (because you'll spend it on new ones.) as such, during a recession demand would increase.

there is one further thing to think about, and that is durability. a durable good is a good that does not wear out quickly. so buyers of used cars may choose to daly there purchase until the recession ends. in which case the demand for used cars will go down.
i think that for most of society used cars are a normal good. this and the fact that cars are non-durable goods will mean that during a recession, demand will go down. and thus price will fall.

Answer 3

No finite answer. In a shallow recession they tend to go up a bit as fewer people are buying new cars and thus there are less second hand cars available. In a deep recession prices of second hand cars go down as nobody is buying a car anymore.

Answer 4

It's possible they could increase if the currency devalues, and also if many people switch from trying to buy new vehicles to used.

This also depends on the supply available.

However, if consumer interest in both new and used vehicles drops proportionately, and if supply and demand stays the same as it was before the recession, there may just be some decrease in price.

Answer 5

There is a potential for used car prices to rise during a recession. As new cars become more expensive, more people turn to the used car market. More demand = higher prices. Also, as more people determine that new cars are out of reach, they may hang on to their cars longer reducing the availability of used cars on the market also raising prices on used cars (there are fewer to be sold).

Answer 6

decrease as more people will be selling and less would like to invest in cars during recession

Answer 7

In general they are right, but to expand on their points, many cheaper or economy cars will hold steady and could even go up, while bigger, most expensive car prices will go down. People still need cars, but they are less willing or able to plunk down big bucks for the Mercedes or Escalade.

Answer 8

I am not sure that the two are closely tied together, but I'd say they probably decrease. For the last few years there has bene a glut of used (especially domestic) cars on the market which has depressed prices substantially.

Answer 9

Second hand cars never increase in value no matter what the economic climate unless the are rare examples or classics.
Depreciation is as inevitable as death and taxes.

Answer 10

I suppose you are betting that the Democrats will win the next general election, because that is the only way we are going to have a recession.