New car promotions impact used car prices

Sales promotions for new cars are the most important factor in determining the price of used cars, according to a report from SK Encar.

The nation’s largest used car retailer said yesterday that if new models’ retail prices are reduced due to promotions, potential customers grow more likely to buy new models. The company said used cars lose competitiveness immediately when showrooms introduce sales promotions because they spread quickly between dealers.

However, the release of new models does not result in a sharp price decline for used cars since consumers anticipate that prices for used cars will drop somewhat. In some cases, used models are more popular than new models in terms of design and price, SK Encar said.

The company said automakers’ recalls due to defects also do not impact used car prices much unless the recall is directly related to drivers’ safety.