Used Car Prices Headed Up
Friday, March 6th, 2009It’s all well and good to advise cash-strapped Americans to consider buying a “previously owned” car as a cost-saving measure, but used car prices have been moving up steadily for the last two months. Apparently the increase is due to a shortage of trade-ins because consumers aren’t buying new cars. I’m sensing a “damned if you do, damned if you don’t” situation here.
It seems that some 60 percent of new car sales generate a trade-in that feeds the used car lot. So, new car sales fall by 610,000 units in the first two months of 2009 and used car prices go up in response.
Tom Webb, chief economist for Manheim’s Used Vehicle Value Index was quoted by Automotive News, “With forecasters continuing to lower new-vehicle sales forecasts for 2009, this supply dynamic is not going to change anytime soon.” (Edmunds has forecast new car sales at 10.1 million units, J.D. Power at 10.5 million for 2009.)
With the Japanese carmakers headed to their government for loans and our Big Three (well, except Ford, which is still making it solo) teetering on the brink of collapse (let’s face it, that’s what GM’s auditors are really saying), it’s hard to be optimistic about a turnaround in the automotive industry this year. If your car is paid for and running, hang on to it. If you have to get something else, used is still better, but be prepared — even that’s going to cost you more than it did two months ago.