Is This Good or Bad News for Automakers?

Today, Brendan takes a look at some interesting news in the auto sector. According to ADESA's wholesale vehicle auctions, the average used vehicle price in the U.S. dropped to $10,271 in May, down $306 from April. This is potentially good and bad news for automakers. It infers that they've been selling more new vehicles lately, which can help drive down used car prices.

Increased production from Toyota and Honda along with easier loan approval and high gas prices are some things that are driving people increasingly to new vehicles. That's a good trend for automakers. But lower used vehicle prices can also have the effect of encouraging more consumers to buy used instead of new in the future. In the video below, Brendan explains whether he thinks this is a net positive or negative for the big automakers.

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Brendan Byrnes owns shares of Ford and General Motors. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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