Not good for GM's dreams of a 13M-16M year anytime soon
Economic slump drives used car sales, prices up
Used car salesmen are becoming the kings of the lot as demand for such
vehicles is starting to rise.
While new car sales continue to fall, many dealers are finding buyers
are willing to spring for a good used car instead.
The volume of used cars sold through dealers rose 3.1% in February
compared with last year, the first year-over-year increase in 12 months,
reports CNW Marketing Research. By contrast, new car sales slid 41.4% in
February from a year ago.
Wholesale used car prices have risen steadily since October, including a
1.1% rise in February compared with January, says Tom Kontos, chief
economist for Adesa Analytical Services, though they remain lower than
in February 2008.
"People are trying to be a bit more responsible in their major
purchases," Kontos says, making used cars more attractive. It's "another
sign of prudence."
AutoTrader.com, an online listing site for used vehicles, says it's
seeing the same price trend at retail, especially for larger vehicles.
The average price of all Ford F-150 pickups listed on the site is up
2.9% from October, spokesman Brian Gluckman reports.
Driving the increases:
•Necessity. A used car is a more economical alternative if the current
"There are people who need vehicles," says Mike Maroone, president of
AutoNation, the country's largest dealer chain.
•Scarcity. Rental car agencies, a top source for late-model used cars,
are clinging to their fleets longer to save cash. And poor new car sales
also cut supply. "Dealers aren't getting any trade-ins," says Tom Webb,
chief economist for Manheim Consulting. As a consequence, "they are
bidding up prices at auction" to have used cars to sell.
•Desirability. Dealers can buy just the used cars that they think will
sell rapidly. With new cars, they often have to take an automakers' slow
sellers if they want more of the hottest models. Plus, used cars can
carry good profit margins.
AutoNation is seeing gains in sales of "certified" used cars, the newest
pre-owned models that are checked out and come with a warranty. Sales
were up 15% last year and "single digits" this year, Maroone says. The
program is being spurred, as well, by 2.9% loan rates offered by General
Motors on certified used vehicles, including to buyers with imperfect
Toyota just began a certified program for used hybrids, which will get a
more thorough and specific inspection of their complex drivetrains.
USED CAR PRICES UP
Used vehicles with the biggest wholesale price increases:
Change from January
Total all vehicles