Certified Pre-Owned (CPO) cars sold at record prices in 2014, as more cars became available and consumer spending trends changed. Edmunds.com’s Used Vehicle Market Report found that 20.8% of total used car sales were CPO cars, with a total 2.3 million sold. The average price for used cars sold at dealerships increased from $15,900 in 2013 to $16,800 in 2014.
One of the main reasons people are shopping at local used car dealers (instead of purchasing cars new) is the increased supply of CPO vehicles. As the economy improves, more people have been leasing new cars, and those cars are now being returned to the dealership to be sold. The recovering economy has also led to lower interest rates and longer periods of repayment, which encourage people to purchase more expensive vehicles with lower monthly payments.
Another factor contributing to the sale of used vehicles is the lower price of gasoline. Consumers are feeling more confident about their budgets, and are purchasing larger vehicles, which tend to be more expensive. The prices of older cars continues to rise as consumers became less concerned with fuel efficiency and more concerned with practicality.
Relatively new used cars, those between one and two years old, made up 19% of all used car sales in 2014, indicating that consumers were willing to pay more for recent technology. The study also found that a growing number of used car purchasers were young people, who may be going through life changes such as new jobs or relocation. In the report, Senior Analyst Jessica Caldwell theorizes that the use of smartphones is assisting consumers in their search for the best deal, contributing to the increase in the sale of used cars.