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How many cars are being sold in trade-in deals in the US?
In 2016, there were approximately 15,928,573 vehicle trade-in deals in the United States. This number was triangulated by finding the percentage of sales that include trade-ins and multiplying that percentage by the total number of new and used car sales. A deeper look at the calculations is below.
Used vehicle statistics
According to the 2016 Edmunds Used Vehicle Market Report, there were 38,513,967 total used car sales in the United States in 2016. The National Automobile Dealers Association (NADA) found that 22% of all used vehicle sales include a trade-in. Therefore, by multiplying 38,513,967 by 0.22, the total number of trade-ins involved in used car deals is approximately 8,472,073.
New Vehicle Statistics
A 2016 Auto Data Corp. report indicated there were approximately 17.55 million new vehicles sold in the United States in 2016. The NADA puts the percentage of new vehicle deals that include a trade-in at 43%. Therefore, by multiplying 17,550,000 by 0.43, the total number of trade-ins involved in new car deals is approximately 7,546,500.
Total trade-in deals
With approximately 8,472,073 trade-in deals in used car purchases and 7,546,500 trade-in deals in new car purchases, the estimated total number of cars being sold in trade-in deals in the United States is 15,928,573 (8,472,073 + 7,546,500).
Additional statistics
Interestingly, Edmunds also found that of the 15,928,573 trade-ins in 2016, 32.8% of them involved negative equity, meaning the owner of the vehicle owed more money on the car than its value. This means that about 5,224,572 (15,928,573 x .328) vehicles involved in trade-in deals were worth less than what the trader owed on the vehicle at the time of the trade-in. There are several reasons given for this record-high number of negative equity transactions, but the main culprit is that since the recession recovery, consumers are "more likely to trade in their vehicles earlier, often before their loan terms expire. The practice contributes to higher amounts of negative equity. In addition, consumers are also "stretching their loan terms as they strive for the lowest possible monthly payment," which means they have paid off a lower amount of their debt when they decide to get a new vehicle than they would have with larger monthly payments.
Another intriguing trade-in statistic is that "1.5% of all new cars are traded in within the first year of ownership." This means that of the 17.55 million vehicles sold in 2016, 263,250 (17,550,000 x .015) will be traded in within 12 months of ownership. Reasons for early vehicle trade-in include buyer's remorse and change in financial status. However, even with that many people trading in their cars withing a year of purchase, the "average new-car ownership period stands at a record 6.5 years."