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KBB Sees Used-Vehicle Values Rising Early Next Year

November 29, 2011

IRVINE, Calif. — Kelley Blue Book is encouraging visitors of its site who are in the market for a used car to buy before the end of the year, as it expects values for used vehicles to jump 4 to 6 percent in early next year.

Used-vehicle values dropped 2.6 percent overall in October, marking the fifth consecutive month of declines. And since peaking in June, used-vehicle values overall have dropped 10 percent, with values for fuel-efficient vehicles experiencing a significant 20 percent decline..

Analysts at the vehicle information site added that the car market has experienced a substantial cooling now that new-vehicle inventory levels, especially for Japanese automakers, have started to return to normal levels and fuel prices have dropped.

"Considering the already significant declines in used-car values since June, Kelley Blue Book predicts that values will decline an additional 3 to 4 percent by the end of the year," said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book. "Used-car values typically decline through the fourth quarter due to a seasonal drop in demand that lasts through the holiday season. We believe sales volume also will decline through the remaining fourth quarter, similar to years past, and as a result values will likely remain soft through year-end, with few exceptions."

Although values are expected to decline in the fourth quarter, Kelley Blue Book analysts predict sales will pick up early in 2012. Projections for 2012 show values bouncing back in the first quarter of the year. 

"Since 2009, used-vehicle registrations in the first quarter have increased by 15 to 20 percent on average from the preceding fourth quarter, and since we expect a similar increase in demand in 2012, a lack of supply will likely put upward pressure on values early in the year," said Gutierrez. "Since we expect fewer leases and trade-ins replenishing supply, values will likely increase across the board as supply struggles to keep pace with demand."

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