As new vehicles sales fall, used car prices go up
The cynic in you might think that a rise in the price of used vehicles, just as new car sales are cratering worse than anyone can remember, is a not-so-transparent ploy to overcharge buyers. It turns out to be more a case of supply versus demand. Wholesale used car prices are bumping up as a result of sagging new car sales, according to auto auction company Manheim. Two-thirds of new car sales have a trade-in attached, which creates a supply stream of pre-owned vehicles to recycle onto dealer lots. With sales so far down, trades are harder to come by, so those cars that are available are fought over more fiercely. The wholesale price rise indicates that dealers are duking it out harder at auctions, more than saying anything about prices consumers are paying. It's our suspicion, looking at how long everyone's inventory is sitting around, that anyone able to buy right now can virtually write their own deal.
[Source: Auto News - Sub Req.]
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Reader Comments (Page 1 of 4)
naggs 3:13PM (3/08/2009)
no one can get financing for new cars, people who need a car have no choice but to overpay for something used. banks are not lending, that is why the economy is going down the s*iter
Reply
Sea Urchin 4:07PM (3/08/2009)
"people who need a car have no choice but to overpay for something used. "------------No, if people really NEED a car, like say to commute to work. They can simply chose a smaller cheaper car, and make a bigger down payment, with that they will find financing.
In other words, if you have a 5 person family and you need to commute to work and can not find financing, instead of a 8 passenger SUV for 50K-60K you can take a look at 25K Accord. Now if at that point you still can not find financing and you have missed a few days at work because your old car does not run, you do the right thing and buy a Civic, which also seats 5 people.
Flashpoint 7:29PM (3/08/2009)
I convinced my best friend to buy a full-sized $27,000 used car with low miles back in September 2007 even though he had poor credit scores. It ended up costing him $670 a month.
He's been able to keep up the payments fine and has never been late.
Some people thought my advice was stupid advice.
HAD HE WAITED he'd be in this situation right now and wouldn't be able to buy anything because the crisis hit a little later and he'd still be taking the bus to work.
Another of my friends, named Chandra asked me to help her pick out a new car - a Honda 2008 Accord. The salesman tried to force her into an I4 but I made her get the V6 fully loaded with Navigation. She however had great credit BUT HAD NO MAJOR CREDIT HISTORY.
She thanks me for my advice cause now, while alot of other accord owners are tooling around in I4's without options, she's got a frickin race car !
HAD SHE WAITED, even with great credit scores, she'd have had trouble getting the financing because of the current situation unless she had more down payment. Her payments aren't bad - $450 a month.
S2K 8:42PM (3/08/2009)
Flashpoint: Contrary to your belief, you may in fact be a complete moron. $670 a month? Holy crap. Unless you're a lot smarter than you let on - and I doubt it - he's probably stuck in a 5 year loan at credit card interest rates. The far smarter idea is to - brace for it - BUILD UP CREDIT and then go buy something that costs tens of thousands of dollars. How about lease a POS new car for a couple of years to get the hang of it? Or finance $5k on a used car just to build credit, then buy a new one in a couple of years? He could have saved THOUSANDS in the long run. Go run at amortization table and look how much your best friend is flushing down the toilet in interest. I'd guess he's giving the bank $10-15k, or 50% of his total principle. Think of all the pancakes he could be buying you without your advice.
And convincing a girl to buy more car than she needs? The salesman tried to "force her" into a cheaper car with less profit in it for him? Dude, come on. Chandra sounds like the millions of other Americans that collectively got us into the sh**hole we're in now - buying way more than they need. I just talked my girlfriend into buying a used Altima 4 cyl instead of the V6 - after a 30 second conversation she realized that she preferred gas mileage to power hands down. And in this economy when "no one can get a loan", she's at 4.9% on a used car. Score one for good credit.
Buying something that you're barely able to afford isn't cool or groundbreaking, it's flat out irresponsible. Take a couple of finance classes and stop doling out advice, for the sake of the rest of us and the money of those around you.
Sea Urchin 8:46PM (3/08/2009)
Flash.................aha I4 is too weak for your friend?
Sea Urchin 9:30PM (3/08/2009)
Flash do you even understand that most people do not need V6, it costs more money and eats more gas. I do not know if you heard but we are in a depression, every penny counts. I would rather drive a 1996 Cobalt and save money than live in debt with a NAV Accord V6.
But i guess you are far more in tune with American way of life.
Flashpoint 12:29AM (3/09/2009)
Sea Urchin
NO...Correction...YOU ARE IN A DEPRESSION.
My job is SAFE. I'm a public school Assistant Principal for Technology/Science and my students are doing VERY WELL thanks to the ZERO TOLERANCE POLICIES I've enacted on the student body.
I make over $95K a year and deserve every penny of it for putting our school on the map.
You think of money differently than I do.
waiownsyou 12:48AM (3/09/2009)
I, for one, am extremely disappointed that Mr. Flashpoint has yet to mention his S-Class. I am very disappointed.
kumquat 1:02AM (3/09/2009)
@waiownsyou:
+1. I was looking for the "hay guys I drive an S550" from Flashpoint but was sorely disappointed.
naggs 1:34AM (3/09/2009)
sea urchin, im not talking about the poor guy who has to wait to by an escalade or 911. right now, most people under 30 would not qualify for even several thousand dollars in financing towards a new car. if you cant get financing for a base KIA how do you downsize to cheaper new car?
naggs 1:42AM (3/09/2009)
you guys really do not know how bad it is out there right now
about a year ago i bought a new honda fit, i was upsidedown on my trade in, didnt have full proof of my income, had debt and not great credit
yesterday, my friend, same age, probably 100 points hight credit score, no debt, $10k in the bank, tradein worth a few grand, and at least twice the salaried income cannot get anyone to loan him $10 towards a mini
the markets are seriously F@&KED right now. im glad i bought when i did because i know i would have no chance at a tata nano today!
akboss302 9:16AM (3/09/2009)
From Flashpoint: "YOU ARE IN A DEPRESSION." "My job is SAFE".
I'm quite sure I haven't encountered someone so naive or self centered in a while, and it is even more disappointing you are teaching our youth. How many people do you think in the past year have said that and lost their jobs? And you say "you're in a recession", as if you're somehow isolated? Actually, it is very real, and does indirectly affect us all. Just because your industry may have sustainability, it doesn't mean that a better person for the job won't come along, and it sounds like there are lots. Plenty of people have been fired from booming careers because of being pretentious and ignorant.
Flashpoint 10:51AM (3/09/2009)
Because it is my job to actually TRAIN TEACHERS how to teach, based on the STATE GUIDELINES, I would take the arrogant route and say: if you don't do as I say you are going to screw up. My advice is right 100% of the time. When people don't do as I say, they tend to screw up.
My advice is based on logic and facts. They have freedom to choose to ignore me BUT, I make it a point to show people under my tutelage exactly how great my advice and my instruction is by showing the ACHIEVEMENTS and RESULTS of those who follow me.
How many people do you know are almost 30, make $95,000 a year and are successful within an industry decried for failure?
My logic is simple.
I only take the best and brightest students and teachers.
I make em better.
Anyone who can't follow instructions - I toss out like so much trash.
My hero is Darwin - "survival of the fittest" is my personal motto.'
"Those who do not adapt to the changing situation will PERISH.
I will adapt.
To all those of you who thought they could play around in school and go to college for a bullsht degree - you're gonna be pumping gas into my S550 (there, I said it).
Stephen 5:49PM (3/09/2009)
Flashpoint: "My hero is Darwin"
Darwin would be so disappointed to hear that. Please don't invoke logic and Darwin to justify your arrogance and your lack of compassion.
Mel. R 3:24PM (3/08/2009)
O Rly?
I've been watching a pre-owned car online for four months and in that time, the price has dropped $6K.
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Sean 4:53PM (3/08/2009)
Can you be a little more specific? Is it economical, safe, reliable, and easy on the mpgs?
Mel. R 5:37PM (3/08/2009)
Sean- Yes, yes, yes, and yes. And it's only a year old.
Oh, and economical and "easy on the MPGs" pretty much amounts to the same thing.
71cuda 11:15PM (3/08/2009)
You're looking at a Prius. They are much cheaper now than they were in the summer. They haven't rebounded at all either, because there are plenty being traded after six months of cheap(er) gas.
tankd0g 2:16AM (3/09/2009)
Check the engine bay for squirrels.
KT 11:03AM (3/09/2009)
Because it's been in inventory FOUR months!
If it's a smart dealer he would be taking it to auction and making money on it. If that vehicle was bought at auction (or traded) 4 months ago, chances are the wholesale price has increased since the first of the year.
I work at an auction and the story is spot-on. Prices for used vehicles are way up from 4Q08.