If you have plans to sell your current ride anytime soon, we have good news and great news.
The good news is that your used car isn't depreciating very much, and it's not likely to do so for the next couple of years. That prediction comes from the National Automobile Dealers Association, which says that used cars are likely to retain a good portion of their value through at least 2014.
As an example, NADA gives the example of a used car worth $12,000. Over 2012, that vehicle is likely to depreciate by about 15.7%, or $1,884. In 2014, that same $12,000 used vehicle would likely slip $1,992 in value, which isn't much more.
What's more: NADA's depreciation figures are just averages. Certain types of cars -- namely, hybrids and smaller fuel-efficient models -- may hold their value far better.
The great news? This means that you should have many more options when it comes to replacing your ride. As we mentioned earlier this month, low depreciation rates mean that the price difference between new cars and used cars can be pretty slim -- especially when dealer incentives are taken into consideration. So, for example, instead of trading in your used car for another used model, you might be able to score a brand-new car for about the same price.
Why are cars retaining their values
As we've discussed several times before, today's used car values are high for a number of reasons. Chief among them:
1. Car sales bottomed out during the Great Recession. Fewer cars were made during that time, and fewer were bought, too. That has put a dent in the availability of used models, and as we all remember from Economics 101, when supply is reduced and demand stays constant, prices edge higher.
2. Although the economy is still shaky, the recession is over, and car sales are on the rise. However, NADA points out that automakers aren't overproducing vehicles like they did before the crash. That limits the inventory of new cars, which boosts new-car values and also trickles over to keep used cars from depreciating too much.
3. Consumers are holding onto their vehicles for longer than ever. That's not just because of economic concerns, it's also because cars are made better than they once were. Ultimately, that decreases the availability of used cars, causing their value to rise.
Are you looking to trade in your current vehicle soon? Will you replace it with a new or used model? Let us know your plans in the comments below.