A Glut Of Trade Ins Could Hurt New Car Sales

Is the used-car market signaling a coming slowdown in new-car sales? Economist Aubrey Zaffuto of AZ Advisory notes that used-car prices rose just 0.1% in December, after exploding at around an 11% annual rate in the prior nine months. While rising trade-in values fuel new-car sales, such sales increase the available supply of used cars and eventually cause trade-in values to weaken. If that is now starting to happen, says Zaffuto, new-car demand will soften.

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