Calafia Beach Pundit submits:
Over time, one would expect the average selling price of used cars to climb in line with inflation and in line with new car prices. As this chart shows, that is indeed the case, if your time horizon is sufficiently long. Notable exceptions to this occurred in the early 2000s, and then in 2008. The first period was one in which the economy was feeling the after-effects of very tight monetary policy from 1996-2001. Tight money had led to declining commodity prices, declining gold prices, and a very strong dollar. Weak used car prices were reflecting deflationary pressures that were showing up in a lot of asset markets. The second period was dominated by the sudden collapse in confidence and spending that in turn was the fallout from the financial crisis. Prices fell because demand collapsed.