Bloated supplies, further declines in resale value will be the end result.

 

How will that significantly affect resale values? Kelley Blue Book (KBB) and NADA figures are taken from nationwide supply and demand for specific used car models. But a couple of local dealerships going out of buisness, representing a few hundered vehicles at most, is not going to significantly affect resale values, at least on a national level, to the point where it would change published KBB/NADA figures. It COULD affect supply and demand on a small scale, locally....but even that would be quite limited.

 

Yes, of course limited impact on resale values, but it's still impact. All the factors including above have some impact on resale values and KBB values are declining accordingly. But most of the dealers closing here (locally) were selling less desirable cars anyway which have already experienced terrible depreciation and low demand (Buick. Hummer, GMC, Jeep, Chrysler). Supply (excess) and demand rules apply as usual, basic economics at work.

 

Well--it's really not bloated suppy, it's decreased demand. 3-4 years from now, when everything is peachy, the number of 2009 cars in the used car market may be normal. If there was increased production, i.e., "bloated suppy", when those cars all come off lease, the re-sale value will be low because there's more back in the market place. But if cars aren't selling because lower demand, but average or below average production numbers, resale in 3-4 years may be HIGHER--if more people are looking for a 3 year old Lexus in 2012, supply is low, demand is high, and price is high.

 

Of course supply and demand control, but there's a difference between supply and demand for new cars vs. resale value of used cars.

Look at last summer when gas shot up to $4/gal. Economy cars were all the rage, and pre-owned Civics and Corollas were fetching top dollar--which had nothing to do with their sales when they were new. Likewise, it was hard to find a new Prius--but that doesn't necessarily dictate what the resale of that Prius will be like in a couple of years.

 

Yes agreed, both supply and demand are important factors. And both factors are impacting market today as mentioned (slowing demand, excess supply with cars being stored in unusual places, etc.)

 

Yes there is a difference, but they often move lock-step together in the same direction. For example GM trucks with $10K+ discounts new had a corresponding drop in used resale values too. Your good example of the Prius has had similar changes in new car and used car pricing with gas much lower than the $4 high.