Just a couple years after U.S. auto sales plunged to their lowest levels in decades, dealers are finding an industry-wide shortage of used vehicles. This lack of used inventory has driven up the price of scarce pre-owned vehicles on lots, sending more and more consumers into aggressively priced new vehicles. One economist says as many as 500,000 people who intend on purchasing used will instead take delivery on new vehicles by mid-2012.
This phenomenon wasn't completely unexpected. When production and sales slumped, many realized the steady supply of returned leased and fleet vehicles – which traditionally deliver late-model low-mileage inventory – would slow to a trickle down the road. The used vehicles are often reconditioned by dealers for sale with extended warranties, but special financing and automaker incentive packages usually don't apply. Parked next to new vehicles, with aggressive pricing and low interest rates, consumers are finding only a marginal jump in price (if any) will put the aroma of a freshly minted vehicle in their driveway.
The news is good for automakers such as BMW (new car sales up 13 percent), GM and Ford (both expecting a 10 percent boost). However, most Japanese automakers are still reeling after production losses earlier this year which won't allow them to stock lots and take full advantage of the unique situation. Industry experts, who are able to trend new and used vehicle sales, predict the used car market will remain strong for at least the next year or two.