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High inventory could sink used car prices

Posted on Friday, February 14, 2014 at 9:29:22 AM

Few factors this year appear to be having as large of an effect on used cars prices as surplus inventory, according to a recent report from Edmunds.com.

While this may sound like good news for car shoppers interested in auto financing, the changes in this segment could impact the new vehicle market as well.

"Many car shoppers might not realize how much the new- and used-car markets feed off each other," said Philip Reed, Edmunds.com senior consumer advice editor. "The boom in new car leases, for example, is leading to a higher number of lease returns, which adds to the growing inventory of used cars, forcing their prices down."

In addition, Edmunds.com noted that there should be better certified pre-owned car deals available, as well as a greater selection of used cars in general. However, it is important to remember that trade-in values will also decline.

According to the J.D. Power 2014 U.S. Vehicle Dependability Study, some options have held up better as the years progress. For example, Lexus took the top spot for vehicle dependability for the third year in a row. Second place belonged to Mercedes-Benz, followed by Cadillac, Acura and Buick. These brands were voted as the least likely to develop problems over a three-year period.