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Used Car Market Well Stocked

Prices Don’t Reflect Used Car Supply

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Used Car Market Well Stocked

Automotive Remarketing.com, which is an excellent source of information about the used car market, can’t seem to make up its mind what the market is doing, based on its email newsletter from Jan. 19, 2010.

Image © AutomotiveRemarketing.com

There's something strange afoot in the used car market that is at first perplexing. Sales are down, yet prices are increasing. Are you, the consumer, being duped? It could seem so based on research. After all, dealers make money off used cars but actually lose money on new cars (expecting to make up the difference in service and financing). The used car market is well stocked but prices don't reflect used car supply.

Just take a look at the image that accompanies this article. Automotive Remarketing.com, which is an excellent source of information about the used car market, can't seem to make up its mind what the market is doing, based on its email newsletter from Jan. 19, 2010. Two respected trackers of auction prices came to totally different conclusions. How can you help but be confused?

According to Mannheim Research, the total number of used cars sold in 2008 was 36.5 million. (Used cars include all makes and models like pickups, SUVs, crossovers, etc.) That number was expected to drop to 33.8 million based on projections in February 2009, according to Edmunds.com analyst Joe Spina. However, he told me (via the Edmunds PR folk) that number should actually end up being about 35.3 million.

Yet, days earlier Spina said in a statement, "Used car prices rose in 2009 because inventory was limited and demand was strong." Demand, though, was down when compared to 2008 by about 3.2%.

Let's look at the total number of new cars sold from 2000 to 2010:

  • 2009 - 10.4 million new cars
  • 2008 - 13.2 million new cars
  • 2007 - 16.1 million new cars
  • 2006 - 16.45 million new cars
  • 2005 - 16.93 million new cars
  • 2004 - 16.9 million new cars
  • 2003 - 16.6 million new cars
  • 2002 - 16.8 million new cars
  • 2001 - 17.1 million new cars
  • 2000 - 17.3 million new cars

From 2000-2006 118 million new cars were sold in the United States. Honestly, how many of those are no longer on the market is not known, but let's assume 90% still are: that's more than 100 million cars or more than a three year's supply. There are plenty of used cars on the market. It's perception that makes buyers think used cars are scarce.

It's to the advantage of the used car dealer, too, to foster this belief. Used cars are more profitable so they want you to think they are more expensive. Who can blame them? Fortunately, you are a well-informed consumer so you don't have to buy from them.

Keep this in mind as this article is being written in the third week of January 2010. The used car market is well supplied. Prices are beginning to reflect that. Don't believe what the dealer is telling you.

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