Why Lower Used-Car Prices Hurt The New-Car Recovery A Bit ...

Why Lower Used-<b>Car Prices</b> Hurt The New-Car Recovery A Bit <b>...</b>

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Why Lower Used-<b>Car Prices</b> Hurt The New-Car Recovery A Bit <b>...</b> Posted: 31 Jan 2014 05:45 PM PST Jan 31 2014, 7:45pm CST | by Forbes Used-car prices are declining – not alarmingly; they're heading back towards normal, really – but that's letting some air out of the recovery in new-car sales and car company profits. That's important for the auto manufacturers because unusually high used-car prices have been a tail wind in several ways. High used-car prices mean the car companies and their captive finance companies lose less money – they may actually even make a profit – on cars and trucks coming back from leases. High used-car prices mean there's less temptation for customers to buy a used car instead of a new car. True, the car companies and their dealers sell more and more "certified pre-owned" cars, but the manufacturers are much more highly motivated to sell new cars. High used-car prices also mean customers are less likely to be "upside-down" late in the life of their loan, owing more on their car than the car is worth. So-called "negative equity" makes it more expensive or often just plain impossible for customers to trade in their old car and buy a new one affordably. What's driving down used-car values today is the rebound in new-car sales that began in 2010. "As stated many times in past reports, the overriding dynamic in today's used vehicle market is rebounding supply," said Tom Kontos, executive vice president and chief economist, ADESA Analytical Services, Carmel, Ind., in a report on declining used-car values earlier this month. In December, the average used-vehicle wholesale price at auction was $9,661 in December 2013, down $126 or 1.3 percent from December 2012 according to ADESA, an auction firm. "The softening price trend was evident throughout much of 2013, with some reversals at the beginning of the year due to lingering supply shortages arising from Superstorm Sandy, and later in the year due to strong retail used vehicle demand," he said. It's an uncertain world, but one sure thing is that the U.S. auto industry manufactures used cars at the same time it makes new cars, in a 1-to-1 ratio. For instance, new-car sales increased about 1.2 million units in 2010 over 2009. That means the supply of 3-year-old used cars increased by the same 1.2 million in 2013 over 2012 – minus those that got totaled beyond repair. The drop in new-car sales leading up to 2009 had the opposite effect, driving up used-car prices for the next few years. Earlier this week, Ford Motor Co. reported that in 2013, the average auction value for its cars and trucks coming back from a 24-month lease was $19,000, down $875 from 2012. For 36-month leases it was $17,385, down $150. Those numbers reversed at least a three-year positive trend. To be sure, auction values were higher in 2013 than they were in 2009, Ford said, but by a smaller margin than before. Source: Forbes Auto Don't miss ... Forbes Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning. blog comments powered by

Forza 5 update hits Xbox One - lowers <b>car prices</b>, adds new modes Posted: 19 Dec 2013 03:25 AM PST Forza Motorsport 5's much-anticipated "miser's bounty" update is now available to download from Xbox Live. It's a 455 MB file that raises the rate at which players earn credits, lowers car prices and introduces a couple of new modes, Tag and Drag Racing. Thanks to our Twitter follower DarkWolf747 for the heads-up. "With this content update, we are dramatically increasing the rate at which credits are earned in the game," Turn 10's Dan Greenawalt explained in a recent chat with Majorly Outspoken Nelson. "For example, the bonus amount earned when you level up in Forza 5 has more than doubled. A player using average difficulty settings will see approximately a 60 percent increase in credits earned per hour - a number that can be further increased by upping the difficulty settings. Zoom "The flip side to awarding more credits is lowering the price of the best cars in the game," he went on. "Cars like the Lotus E21 grand prix car - one of the fastest, most desirable cars in Forza 5 - has gone from 6 million credits at the launch of Forza Motorsport 5 to 2 million credits with this content update. "Now, that's still a lot of credits but, when combined with the reduced price with our increased credit payouts and features like our Forza Rewards loyalty program, even the most exclusive cars in the game are now within the reach of all Forza Motorsport 5 players." This follows a fair amount of controversy over the game's microtransaction systems, which some players feel are a bit muchly much. Turn 10 has suggested that it will make further changes should they be necessary. As for the new modes, Drag Racing supports 16-player drag racing lobbies, one-on-one heats and eight-player drag races. Tag, meanwhile, is a highly combative mode in which players try to "infect" each other via the gentle medium of high velocity collisions. Here are three variations, as described by Greenawalt. Keep the It: One player begins the match as "It." The goal is for the "It" player to keep "It" status for as long as possible. "It" status transfers each time someone makes contact with the "It" player. Once the match timer has completed, the player with the most "It" time wins. Tag Virus - One player begins the match as "It." Each time an "It" player makes contact with another car, the "It" status spreads like a virus. The last uninfected player standing wins the match. Pass the It: Similar to "Keep the It", one player begins a "Pass the It" match with "It" status. "It" status transfers each time someone makes contact with the "It." At the end of the match, the player with the least amount of "It" time wins. Let us know what you think of the new prices. Cooked up any fun Forza 5 designs lately? The below gallery should give you a run for your money, virtual or otherwise. Prev Next

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