Wednesday, January 28, 2009

Used Car Sales Suffering Too

I would have thought buyers would be "downsizing" to used cars with all the market turmoil. Apparently not, as Autonews reports:

Used-vehicle prices have fluctuated so much recently that dealers say they are having trouble choosing which used cars and trucks to buy and how to price them at retail.

The chief culprit, dealers say, is the price of gasoline, which has swung from about $3 a gallon a year ago to more than $4 last summer to less than $2. As gasoline prices drop, dealers say, used-vehicle customers are more interested in trucks and less drawn to fuel-efficient cars. When fuel prices spiked last year, they say, the preferences were reversed. Those changes affect used-vehicle sales and prices.

Compounding the problem, dealers add, are the decreased availability and higher cost of floorplan loans, which make decisions about used-vehicle inventory even more critical.

Fortunately, there may be some relief on the way for sellers:
Tom Webb, chief economist at Manheim, the nation's largest auto auction company, says relief is on the way. Gasoline prices are stabilizing and lenders are making more floorplan credit available to dealers, he says. Both factors should moderate swings in wholesale used-vehicle prices, he predicts. "January will be a pretty good month on the upside," Webb says. "A lot of volatility has passed."

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