Deflation Makes Used Cars a Better Buy, Says Columnist

Doron Levin, columnist for Bloomberg News, says that prices of used cars have been falling faster than those of new cars, widening the gap between them. He added that that is bad news if you own a used vehicle or plan to trade one in. But it could be an advantage for those in the market and willing to consider buying a slightly used car instead of a new one. Levin added that the heavy supply of vehicles undermines value and equity, a problem for new-car sales because consumers rely on the equity in their current vehicles for the down payment on their next one. He noted that major design changes in new cars usually don’t happen more than once in four years, so most people would not notice the difference. He quoted a Detroit area dealer as saying “Most people wouldn’t know if I was driving a brand-new car or one that’s a year old.”