Edmunds' report shows a 100,000-mile car has gained in value

(November 14, 2017) SANTA MONICA, Calif. — It's been a long-held belief among car buyers and sellers that once a vehicle passes the 100,000-mile mark, its value begins to decline dramatically and its best days are behind it. However, the Q3 Edmunds Used Vehicle Market Report reveals that's now largely a myth.

Thanks in large part to a tight supply of late-model used vehicles, values don't dramatically decline once the odometer crosses the six-figure mark. Edmunds' analysis reveals that vehicle values decline only incrementally between 100,000 and 150,000 miles, and the rate of depreciation is similar to the decline that occurs between 50,000 and 100,000 miles.

"After about the first 40,000 miles, vehicles depreciate at a slow and steady pace. The most dramatic drop-off is actually during the first 20,000 miles," Edmunds Senior Analyst Ivan Drury said.

"The 100,000-mile myth is really just a psychological barrier that more and more car buyers are getting past. Following the recession, many people were forced to hang on to their vehicles longer than they may have wanted to simply because they couldn't afford to get a new car. People then saw for themselves how much vehicle quality has improved and realized that a car with 125,000 or even 150,000 miles still has a lot of life left."

These older, higher-mileage vehicles are in high demand among car shoppers. For example, in the third quarter of this year, a 2013 model year vehicle with between 10,000 and 20,000 miles on the odometer took, on average, the exact same amount of time to sell as one with between 90,000 and 100,000 miles. A 2010 model year vehicle only sat on a dealer's lot for an average of 34 days in the third quarter of this year, while a 2013 model year vehicle sat for 42 days and a 2016 model year vehicle took an average of 51 days to sell.

"Even though the number of off-lease vehicles entering the used market is starting to level off, the average price of a used vehicle is still at a record high because demand also remains strong at the lower end of the market," Drury said. "While the oversupply of newer vehicles is good news for buyers who can afford them, there's still a very large segment of the population who just want an affordable vehicle to get them from A to B, and those are becoming much harder to find."

The popularity of SUVs and trucks is also a driving force behind rising used-vehicle prices, and it is creating a significant residual value gap between passenger cars and larger vehicles. For example, a used 2015 midsize SUV with 100,000 miles still holds 50 percent of its original value; however, a midsize car with 100,000 miles retains only 42 percent of its value. The gap further widens between older, low-mileage used SUVs and passenger cars.

"If you're someone who's hanging on to an older SUV and thinking about trading up for a new vehicle, this could be a great time," Drury said. "You'll have the chance to take advantage of record-level new vehicle incentives and year-end savings, as well as get top-dollar for your current vehicle."