Prices of Used Cars Rising Sharply (WSJ)

http://online.wsj.com/article/SB10001424052748703859304576307132781060592.html

Shrinking Supplies Mean Bye-Bye Used-Car Bargain
By JEFF BENNETT And MIKE RAMSEY

Count on digging deeper to buy a used car for junior. Prices for used cars hit a record high in April and are poised to go even higher as production cutbacks during the recession and the more recent Japanese earthquake has made used vehicles a hot commodity as dealers dive into the depleted pool for cars to fill their lots. The one-two punch has added between $1,500 to $3,000 to the price of some used cars just in the last six months, meaning more money for trade-ins and a tougher time for shoppers looking for a deal.

"The price of used cars is just crazy right now," said Adam Lee, chairman of Maine dealer Lee Auto Malls. His dealership is paying hefty sums for cars it normally might not purchase to have a full inventory. "It can be a piece of junk—cars we used to pay $2,000 or $2,500 for, we are now paying $5,200 to $5,500," Mr. Lee said. Dealers say the prices of used vehicles will continue to soar as inventories of lower-priced and economy cars shrink. Japanese auto makers Toyota Motor Corp. and Honda Motor Co. have warned their production could be limited through year-end. U.S. dealers say they expect to exhaust existing inventories and face severe shortages of new Japanese cars by July.

The topsy-turvy market has dealers that once quickly dumped trade-ins to wholesalers now holding onto those vehicles to fill out their shrinking inventories. The move is raising the value of trade-ins, helping dealers convince customers to buy brand new cars. Stephanie Samuels went shopping for a used car but found prices for a late model car nearly as much as for new—and financing for the new car easier to obtain. "I was looking at buying a 2009 Ford Focus which was going to cost me about $16,000," Ms. Samuels said. "But for a couple grand more I could get a new Focus and a better interest rate. So now I am shopping new."

On Friday, wholesale auto auction house Manheim, a unit of Atlanta-based Cox Enterprises Inc., said its index hit 126.6 in April and adjusted wholesale prices of used vehicles rose 5% from a year ago. It's the highest level the index has reached since it started tracking prices in January 1995. The index sets its baseline of 100 at January 1995. The biggest increases are for fuel-efficient cars and small SUVs, where prices are up as much as 20% since January, according to Kelly Blue Book Co., which tracks trade-in values. For example, it says average trade-in of a mid-size car, such as the 2008 Ford Fusion, rose $1,800 to $11,375 between January and May. Average value of a hybrid car such as a four-door Toyota Prius hatchback jumped $3,775 to $17,040 in those four months...

Now's a great time to buy a new car!

:silly:

every time gas prices spike. And every time prices go down the story is how Americans are abandoning smaller cars and buying the latest humongous gas guzzler.

to buy a fire-sale SUV, lol. I live 2 miles from my office. I brely put any miles on my old car the last 3 or 4 years before it got stolen. I can use mass transit to get just about anywhere I want to go. I only need a car for major hauls of cat litter, or when I need gallon jugs of vinegar for pickling or bleach or cleaners for the office. Heck, stuff for the office can probably ALL be ordered and delivered.

Cat litter hauling. I can get by with doing that 3 times a year. I should just rent a car occasionally. Then I can ignore the resale price issue altogether....

some of the cats pull a cart.

Now that would be a sight to see!

And I can only get it at PetSmart, which is 5 miles away. Try handling THOSE when you are 5'4", 130 lb and over 50. I try to buy them 3 or 4 at a time, which lasts me MONTHS, so I don't have to get them very often at all.

Hauling less adequate litter home 16-25 lb at a time on the bus is a monumental waste of time and energy.

There are a lot of high mileage dogs selling for $5000 and up. People seem to be driving their cars right into the ground before getting rid of them. The economics of the used car market really suck.

and it's worth more than I paid for it right now.

Partly because of high gas prices and partly because of production stoppage in Japan.