Used car

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Small used car lot in the United States.
Typical new car dealership selling used cars outside the showroom.

A used car, a pre-owned vehicle, or a second hand car, is a vehicle that has previously had one or more retail owners. Used cars are sold through a variety of outlets, including franchise and independent car dealers, rental car companies, leasing offices, auctions, and private party sales. Some car retailers offer "no-haggle prices," "certified" used cars, and extended service plans or warranties.

Used car industry[edit]

With annual sales of nearly $370 billion, the used vehicle industry represents almost half of the U.S. auto retail market and is the largest retail segment of the economy.[dated info][citation needed] In 2005, about 44 million used cars were sold in the U.S., which is more than double that of the nearly 17 million new cars sold.[dated info]

History[edit]

In 1898, the Empire State Motor Wagon Company in Catskill, New York is one of the very first American used car lots.[1]

The used vehicle market is substantially larger than other large retail sectors, such as the school and office products market ($206 billion in estimated annual sales) and the home improvement market ($291 billion in estimated annual sales).[dated info]

Used vehicle retailer[edit]

The Federal Trade Commission recommends that consumers consider a car retailer’s reputation when deciding where to purchase a used car.

Vehicle history reports[edit]

In the United States, an estimated 34% of consumers (in 2006) are buying a Vehicle history report for used cars.[2] Vehicle history reports are one way to check the track record of any used vehicle. Vehicle history reports provide customers with a record based on the vehicle's serial number (VIN). These reports will indicate items of public record, such as vehicle title branding, lemon law buybacks, odometer fraud, and product recall. The report may indicate minor/moderate collision damage or improper vehicle maintenance. An attempt to identify vehicles which have been previously owned by hire car rental agencies, police and emergency services or taxi fleets is also made. Consumers should research vehicles carefully, as these reporting services only report the information to which they have access.

In some places the government is a provider of vehicle history, but this is usually a limited service providing information on just one aspect of the history.

Two vehicle history reporting services used to offer the service for free namely InstaVIN and VinCheck. But currently customers need to pay to view vehicle reports through InstaVin. VinCheck became part of AutoCheck and provides very little information for free, and customers need to buy a detailed report. Several of the services, most notably those in the United Kingdom and the United States, sell reports to dealers and then encourage the dealers to display the reports on their Internet sites. These reports are paid for by the dealer and then offered for free to potential buyers of the vehicle.[citation needed]

In the UK, the DVLA provides information (Car check) on the registration of vehicles to certain companies for consumer protection and anti-fraud purposes. Companies may add to the reports additional information gathered from police, finance and insurance companies. Car check service is available online for the public and motor trade.

Used car pricing[edit]

Used car pricing reports typically produce three forms of pricing information.

  • Dealer or Retail Price is the price you should expect to pay if buying from a licensed new-car or used-car dealer — retail price.
  • Dealer Trade-in Price or wholesale price is the price you should expect to receive from a dealer if you trade in a car. This is also the price that a dealer will typically pay for a car at a dealer wholesale auction.
  • Private-Party Price is the price you should expect to pay if you were buying from an individual. A private-party seller is hoping to get more money than they would with a trade-in to a dealer. A private-party buyer is hoping to pay less than the dealer retail price.

The growth of the Internet has fueled the availability of information on the prices of used cars. This information was once only available in trade publications that dealers had access to. There are now numerous sources for used car pricing. Multiple sources of used car pricing means that listed values from different sources may differ. Each pricing guide receiving data from different sources and makes different judgments about that data.

Pricing of used cars can be affected by geography. For example, convertibles have a higher demand in warmer climates than in cooler areas. Similarly, pickup trucks may be more in demand in rural than urban settings. The overall condition of the vehicle has a major impact on pricing. Condition is based on appearances, vehicle history, mechanical condition, and mileage. There is much subjectivity in how the condition of a car is evaluated.[3]

There are various theories as to how the market determines the prices of used cars sold by private parties, especially relative to new cars. One theory suggests that new car dealers are able to put more effort into selling a car, and can therefore stimulate stronger demand. Another theory suggests that owners of problematic cars ("lemons") are more likely to want to sell their cars than owners of perfectly functioning vehicles. Therefore, someone buying a used car bears a higher risk of buying a lemon, and the market price tends to adjust downwards to reflect that.[4]

Laws and regulations[edit]

Geographically specific laws[edit]

Canada[edit]

In Ontario, Canada, new and used vehicle sales are regulated by the Ontario Motor Vehicle Industry Council (OMVIC).

European Union[edit]

Used cars have a statutory warranty according to the system of laws of the European Union, the so-called "Liability for defects", which lasts for 12 months.

Queensland Australia[edit]

When the odometer reading is fewer than 160 000 kilometres, and the car was manufactured fewer than 10 years before the sale date, the warranty is three months or 5000 kilometres, whichever happens first. Or if the odometer reading is 160 000 kilometres or more, or the car was manufactured 10 years or more before the sale date, the warranty is one month or 1000 kilometres, whichever happens first.

See also[edit]

References[edit]

  1. ^ Flammang, James M. (1999). 100 Years of the American Auto: Millennium Edition. Publications International. ISBN 9780785334842. 
  2. ^ "J.D. Power and Associates Reports: Vehicle History Reports Are Becoming Increasingly Important to Used-Vehicle Buyers". Theautochannel.com. Retrieved 2010-08-15. 
  3. ^ "Kelley Blue Book - MSN Autos". Autos.msn.com. 2010-02-22. Retrieved 2010-08-15. 
  4. ^ McKenzie, Richard B. (2008). Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles. Copernicus Books. pp. 9–31. ISBN 9780387769998. .

External links[edit]