According to a Soleil Securities analyst, used car values are continuing to decline.  This could have negative repercussions for new car manufacturers that are already struggling.

Analyst Michael Ward claims that the Manheim used vehicle index, which indicates trends in pricing, dropped 6.2% last month, which is the lowest seen since 2004.

Also, according to Manheim, prices of used cars have fallen year after year in each of the past months.

Michael Ward says that the majority of new car sales involve trading in a used vehicle, which heightens the effect of pre-owned car values on the carmakers.  And used car prices that are on the decline are a negative indication of new car demand over the next six months.

The poor economy has hit the auto industry hard, and it appears that this won’t end anytime soon.  Consumers are holding onto their current cars and purchasing used car warranties to protect themselves.