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Used Car Prices Jump Due to New Car Sales Woes

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author photo by Autotrader April 2011

Dealers all over the country are snatching up used cars at a premium as they prepare for the possibility of telling their customers, “I’m sorry, I can’t sell you a new car.”

The March 11 earthquake in Japan has crippled much of the automotive industry, even plants in the United States have had to slow or halt production of new cars because some parts, which are made in Japan, haven’t arrived. The slowing production is causing dealers to ramp up their used car inventories as they prepare to sell slightly used cars where normally they would sell a new model.

The National Automobile Dealers Association is reporting an 11 percent increase in wholesale prices for compact cars that are three to five years old. This would include cars like the Toyota Corolla, Honda Civic or Ford Focus.

The report also shows that the cost of midsize cars, like the Nissan Altima or Toyota Camry, have gone up 8.5 percent, according to the NADA report.

The uncertainty surrounding the ongoing unrest in the Middle East has been driving up fuel prices nationwide, so many dealers are focusing their current efforts on smaller, more fuel efficient cars to meet with the increasing demand.

New hybrid car sales have gone up by 50 percent last month compared with February, as Americans are looking to get into more efficient cars before the stock runs out.

Automotive News has reported that the price of a used Toyota Prius has shot up by $1,900 to $2,400 in the span of just one month. Specifically, the price of a 2008 Prius jumped 4 percent in just one week.

Toyota dealers in California are already claiming that their stock of new Toyota Prii is rapidly dwindling, The Los Angeles Times reported, some dealers are out of the popular hybrid altogether.

Toyota has brought the Prius plant back on line, but production has been slowed as the Japanese manufacturer still struggles with a low supply of parts for the car.

Some dealers have already been making the switch from the new to the used car sales market. One Michigan based car dealer group, Serra Automotive Inc., was hard hit in the late 2000s when it lost eight dealerships that sold Hummers, Pontiacs and Saturns. As a result, the group focused heavily on used car sales and recently reported a 23 percent increase in used car sales from 2009, Automotive News reports.

Big dealer groups like Serra Automotive will be benefiting a lot from the change in the market, and the bigger, the better. NADA tracks the top 125 dealer groups in the nation and they found that the ten most successful groups are accounting for more than half of the top dealer’s sales last year.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Used Car Prices Jump Due to New Car Sales Woes - Autotrader