Used car market rocked by economy

Personal Research | 07-10-2009 | Mene Mene Tekel Upharsin

[MeneMeneTekelUpharsin]

In the process of searching for a used car for my children to use to go to school and get to work (summer jobs), I have made a couple of significant discoveries. Many used cars are selling for way below book value because there is no book value due to the incentives for buying new cars and economic conditions. Few banks will give loans on a used car at this time. Many, many used cars are for sale and remain for sale for quite some time. Cars that should have elevated used values are selling for well below "usual" values.

Does anyone have any other information to add to this per your area? One fellow (Hispanic with accent - recent immigrant) told me tonight on the phone (and he sounded sincere) that they were going to have to sell one of their cars because they were in dire need of money due to economic distress. I have not encountered that type of situation before. He opened up to me and revealed that because I speak Spanish. Nevertheless, I am seeing signs of severe economic duress affecting things like never before.

[MeneMeneTekelUpharsin]

Just some observations on an important part of our economy.

[steve86]

Yeah, I bought a one year old Chevy van for 65% off the MSRP. We are very happy with it. But around here used car prices have gone up in the 6 months since, maybe as much as 20%. However, they are still depressed from a year ago.

[GeronL]

don’t worry when the $4500 old clunker program gets started the prices will take it into account. Probably not a good thing for very many though.

[umgud]

There are still a lot of people upside down in their vehicles due to low resale values and economic problems of their own. I know of lots of folks who took equity out of their homes to buy new cars a few years ago, Theyve lost their homes and can’t sell their vehicles for what they owe.

I don’t need to replace my ‘07 Chevy 4x4 crewcab pickup, but a few months ago, I took it to a dealer who had huge discounts on new trucks........ It was a good thing I don’t need a new truck cuz they weren’t gonna give me squat for mine.

[doc1019]

No worries. In Cuba, the used car market went wild when socialism kicked in and is going strong to this day.

[cmsgop]

Honestly as far as used cars at dealerships in Seattle, there are plenty of loans available and the prices are still somewhat inflated. I'm looking for a 2006 H-3 lease return right now.

[STONEWALLS]

...is the cash-for-clunker program up and running now?....has anybody heard......I’ve heard the dealers don’t want to do the paperwork....I got a clunker and am considering replacing it....any info is appreciated.

[Kirkwood]

Limited supply of both used and new cars here.

[Orange1998]

Not the case in Texas. Used cars are at premium, no one is buying new. At the auto auction not one bid for a bunch of brand new cars off floor plans. Cars bought 6 months ago are going up in value. Strange.

[sourcery]

Things will be much worse by 2012. Expect the worst. You won’t be disappointed. The only silver lining will be the terrible political price the Left will pay for their stupity in winning the recent elections. “Be careful what you ask for: You may get it” applies with full force to the Socialists, for once,

[Crazieman]

What happens when the government screws with the free market.

[GeronL]

I don’t think its running yet... I think Texas had its own program at one point...

[STONEWALLS]

.....the other thing I’ve heard is that state sales tax(6.75%for me)is a federal tax deduction....that, along with cash-for-clunkers money could help me decide if I want to go thru the hell of the new car buying experiance.

[Prophet in the wilderness]

On a Certified Used Car .... what is involved ?
They check the past ownership ? check maintenance records ? check to see if the car was ever in a a accident and if it was what kind of damage ? go over the car top to bottom and see what kind of shape it's in ? ...
I was wondering ? how do they know if a year old car was not abused, over reveled, how do they know if there is any kind of internal damage to the engine that has not shown up yet ? ...

For me ? a well maintained used car that was never abused, kept clean inside and out that has between 10,000 20,000 miles on it is as good as a new car without the huge price value depreciation.

[Spktyr]

AutoExtremist is noting the same thing - http://www.autoextremist.com/on-the-table1/

“
The Great Used Car Boom of 2012. It is coming, the numbers make it a certainty. Consider that U.S. new car sales are expected to be in the region of 9.5 million this year and are projected to be 10 to 11 million units next year. In addition, 12.5 million units have been coming off the road by various means consistently for the past several years. DMV data estimates that approximately three million new driver’s licenses are issued annually. The average car on U.S. roads is 9.4 years old. You see where this is going: Pent-up demand is at an all-time high, while supply is shrinking. But wait, there’s more! New vehicle prices are poised for a big increase. Recently mandated emissions and MPG standards are soon to add $1300 to the cost of a new vehicle according to the manufacturers, although some other estimates are much higher. The bankruptcy of two-thirds of the domestic industry has accelerated the loss of capacity, even while import manufacturers have been shuttering plants. Although excess capacity still exists, it is likely to be largely absorbed by the expected rebound in sales the next couple years. The inevitable result is something the car companies haven’t had in a long time: Pricing Power. So now we have painted a picture where demand is mushrooming, prices are skyrocketing, and the days of “any warm body qualifies” financing and sub-vented leases are pipe dreams of the past. So what choice does the beleaguered American consumer have? Buy used! Signs of this trend have already begun to appear. Although YTD new cars are off by 41%, used cars are up by 3%. Compounding the imbalance of supply and demand is a shortage of used cars, due in large part to a lack of trade-ins. Future supply is due to further constrict as the number of off-lease cars begins to dwindle. Rental car companies are also extending the useful life of their fleets almost exponentially. By 2012 we can look back on this market as the “good ol’ days” when by comparison used cars were bargain priced. What does all of this portend for the dealers? The consumer? Insightful consumers should view the November-December-January time period as a buying opportunity. Historically, the used car market weakens at the end of the calendar year as demand softens and a flurry of trades come in on the new models. I anticipate this year should be no exception, but do not expect prices to approach the depressed levels of last year. Most late-model cars are now worth at least the same and in many cases significantly more than what they sold for last winter. By next spring the used car market will be gathering momentum like a runaway train, and if you haven’t bought your ticket your chances for a good buy will be rapidly vanishing. The opportunities for inexpensive auto ownership (little depreciation) will be great, particularly in the luxury segment. Focus should be on cars that will be in shortest supply in the coming years. Generally this would include later model, lower mileage cars of current body styles, ideally with a least one and at most two years of depreciation realized. I’ll have more next time...”

[Spktyr]

They check to see if the car was in an accident and thoroughly inspect it.

Cars today log information like overrevving and abuse in their computers, so that’s easily enough checked.

[Prophet in the wilderness]

" Cars today log information like overrevving and abuse in their computers, so that’s easily enough checked....

Good ....

Don't need 5 or 7 months down the road and taking a trip to Florida and the main bearing takes a dump on you ...

[Republic of Texas]

In the Dallas area used car prices are up. But that can change any moment.

[mysterio]

The economy is crap because we shipped out jobs over the past few decades to make stuff cheaper. Then the credit ran out and people stopped buying. Game over.

The lofty dream that somehow all of the displaced manufacturing workers are going to go get training to become IT specialists is BS. They are going to work cashier jobs that pay jack and bag groceries on the side, which also pays jack. Discretionary income? Not much. Credit is going to stay hard to get for some time, so they won't be buying. When your GDP is 70 percent consumer spending, that hurts.

Cheap stuff ended up not being so cheap in the long run. And now that's all a lot of us can afford. This kind of stuff has been obvious to those of us living in manufacturing areas. The industrial town near mine went completely under in the past decade, as did many other towns like it. Now the whole rest of the country gets a taste, I guess.

[eyedigress]

I have a 1996 Accord I plan to get 3000 for. I think I’ll get it.

[Spktyr]

Ah, but if you buy a GM car, it is completely possible that will happen even without abuse.

They’ve even had recent cases of shipping V8s out the door with no piston rings. Cute, huh?

[Spktyr]

You mean those living in the *old* manufacturing areas.

Manufacturing has moved South. We make lots of things here and there are still jobs for the taking here.

Just don’t expect to be hired if you belonged to a union.

[Prophet in the wilderness]

" They’ve even had recent cases of shipping V8s out the door with no piston rings. Cute, huh? " ...

You gotta remember ? the Union thugs got to have their 3 45 minute coffee breaks, and hell will freeze over if they will take the extra 5 - 10 mins to put in the last few pistons, just ship it out to make their break on time...

[Prophet in the wilderness]

That is one if the main reasons Boeing is moving their 787 production is moving the production out of Washington state..
Their last Union strike hurt them.
Boeing also want's a 2nd production line to meet the demand to fill the orders for the 787...

[Spktyr]

I find the whining of the Northerners here about how we’re all doomed and how no manufacturing is going on anywhere in the US... then I look around down here in Texas and surrounding states and observe that manufacturing is still alive and well and even expanding here - and it’s such that there’s even backlogs at some contract manufacturers.

It’s not that US manufacture is dying. It’s that the unions have killed off Rust Belt manufacture. Death to the Rust Belt and their unions - long live the Sun Belt. Long live Texas!

[parsifal]

I think you are right. We are in a Greater Depression, just no one wants to say it yet. Wait til the Christmas retail season flops.

parsy, who doesn’t usually hit the panic button

[Post Toasties]

Can you give an example or two? My impression is that used cars have been high recently, with many having asking prices for three year old cars almost as much as brand new ones of the same model where normally they should be down to about half.

[webschooner]

Asking prices are high, but they are not getting takers — if you look in completed sales on ebay motors, even in very popular used vehicles like Toyotas, most late models ebay auctions no sale — in the area of close to 95%.

It looks to me like at most, on average, 5, maybe now and then 6 or 7% of the late model units actually sell on ebay. Sellers can ask whatever they like, but the buyers are holding fast for good buys.

[erman]

It’s not that US manufacture is dying. It’s that the unions have killed off Rust Belt manufacture. Death to the Rust Belt and their unions - long live the Sun Belt. Long live Texas!

THAT's A LIE!!!! All you northerners and union members and liberals... Texas is a dump.. it's awful, we are poor and broke and don't provide any welfare and have no compassion for the homeless...

We're backward, you can't get any good pizza.... there are no Broadway shows... nobody reads the New York Times or brags about doing the f'ing crossword puzzle...

Going to Harvard, Yale or any of the Ivy League is "OK, I guess.... cause it's kinda expensive and ya gotta listen to how smart everybody in the Northeast is compared to Texas."

Our women are fat and ugly... most are meek little scared things that don't know how to defend themselves.... as for you liberal women.. the men down here do stupid crap like open the door for you, say stuff like "yes, sir and no maam" to your parents.

To top it all off we say the Pledge of Allegiance to the Texas Flag... and say "God" in the Pledge of Allegiance.

Just a terrible place... so don't believe the hype.. Texas is terrible and do not move down here and try to make us really, really, really innovative and smart like Detroit, Newark, Chicago or Philly... ya'll have a nice day.

This is Texas

This is NOT Texas

These are Texas women...

These women are NOT TEXANS...

[erman]

These are typical Texas women not the ones above...

stay up North and in California..

[MediaMole]

It probably depends on what you’re looking for. Last year, when gas was $4.25/gallon, I got a nice used SUV for 3 grand under blue book. At the same time, I got more than my old Toyota was worth in trade.

Now, SUV prices have rebounded but the overall car market is down.

If you’re in good financial shape, this is going to be a good time to buy almost anything. But most people aren’t in good financial shape.

[ASOC]

Several dealers in Anchorage are running adverts fot he C4C program - and they will do the paperwork
With 0 down and 0 interest loans to boot.

I see a LOT of 2 yo Jeeps hitting the streets. Lease returns? maybe.

[PghBaldy]

How did FDR do? I am not as optimistic as you are. I hope I am wrong.

[lowbuck]

You got that right. By buying the facility in SC they not only get control of a critical production phase, but, they have the ability to open that second 787 production line.

Helps Boeing in two ways.

If both plants are producing they catch up on the delay in deliveries in a few years and thus keep the customer happy and penalty money in their pockets.

And should the union back in WA decide to “down tools” the folks in SC would probably be happy to take the overtime.

I was once in a union, not by my choice, and love watching them die.

[dragnet2]

You should see the RV industry...

Few if anyone is taking vacations like they used to, and throw in high gas prices....Well the RV industry is dead.

[tdscpa]

It doesn’t matter what the economy is doing. You are going to get screwed every time you buy or trade cars.

I did a trade about a month ago. Should have called the police and reported a rape.

[Lancey Howard]

Thanks for the post. I will be looking for a car for one of my kids real soon and it’s nice to know when you have some leverage.

[Lancey Howard]

No worries. In Cuba, the used car market went wild when socialism kicked in and is going strong to this day.

I heard the used car market in Cuba is... sinking.

[sourcery]

FDR took over at the bottom of the Great Depression: The stock market bottomed just as FDR assumed office.

In contrast, the recent assumption of power by the Socialists roughly coincides with the beginning of another, probably worse Depression: The stock market topped about a year after the Socialists took over Congress, and about a year before they took the Presidency. Also, this Depression will last at least two or three time longer. Because of that difference in timing, the Socialists and their political philosophy will take the blame this time. They won’t be able to falsely take credit for a recovery, because there won’t be one before the next Presidential election. There may not be one until the latter part of the next decade—if then!

[tdscpa]

Boating, too.

[dragnet2]

You should see the RV industry... Few if anyone is taking vacations like they used to, and throw in high gas prices....Well the RV industry is dead

Boating, too.

You bet.

I have a neighbor who has this mid sized motor home, he's been trying to sell for 9 months...

All all these people or most are paying storage fees for stuff they're not even using...And many are making payments on those boats and RVs...

Their eating the big burrito in this economy.

[justa-hairyape]

Gonna Party Like its 1999 !

Starting to look like Y2K fever.

[NoControllingLegalAuthority]

That prediction assumes enough people will have the money to buy the cars.

The economy is still getting worse.

During the Great Depression, you could buy a bottle of soda pop for a nickel but nobody had a nickel.

[MeneMeneTekelUpharsin]

I have a 1996 Accord I plan to get 3000 for. I think I’ll get it.

'96 Honda Accords can be had in South Central Texas for around $1500 to $1800. You may have to fix the A/C, but that is not that big of a problem. I don't believe you'll get $3,000, but I've been wrong before (many times).

[Orange1998]

I am seeing the same in Houston. I know of small used car dealers unable to buy because the franchise dealers are paying top dollar at auctions. My thoughts maybe consumers buy used because jobs are at stake (what are the chances of Father in Law helping out when you have a new 50K vehicle in driveway). Or simply consumers are voting with pocket book about the demise of GM and Chrysler.

[RegulatorCountry]

I bought an 07 off-lease Corolla last spring for $12K and the identical car with more miles on it is advertised for $14K now.

Can’t say I’ve ever bought a recent model used car that increased in value before. Toyota came out with a new body style for Corolla last summer, and they’re selling used for the same or less than the 07. Not making sense, unless there’s something undesireable about the new model. Could be gas mileage, but that’s really due to a revision in the EPA calculations, not that the gas mileage is actually worse. 38/30 for the previous model, 35/28 for the current one.

[wayoverthehill]

Certified means it is practically like brand new. On my Cadillac, it meant a full warranty for 6 years or 100K. I bought a 2006 CTS in Feb. 2007 with 28K on it. Warranty goes until Oct. 2011 and I only have 44K on it now. Everything has been completely covered although I have only had to have a new battery and a new gas cap. Other than that, no problems.
Saved about $15K on the purchase over a brand new car.

Cadillac’s Certified program is highly rated as is Honda’s and (I think I heard correctly), Mazda.

[wayoverthehill]

True. I work for the county tax-assessor in vehicle registrations & title transfers and I can tell you the small independent dealers are selling LOTS of cars and they all tell me they are getting harder and harder to come by. A lot of the cars are repos too. Late model cars with low mileage. Pre-owned cars are definitely at a premium here in North Texas.

[wayoverthehill]

They did. Called Texas Clean Air (or something like that). $3K for your car if it was at least 10 years old and could not pass emissions testing. There were also income limits to qualify. They ran out of money earlier this year but I believe they pumped more money into the program because it was so popular. I think it goes until September but I’m not positive.

[engrpat]

We have been in the market for a Honda Accord. Checked around and the best deal used we could find was a 2 year old with 36,000 at Car Max. Went to the dealership and bought new out the door for $2,000 more than the used one at Car Max. They were very willing deal.