Now that cash for clunkers has gone the way of GWB, used car values are plummeting in earnest. Last Monday, I visited three auctions in the metro-Atlanta area. Sale number one was without their two heavy hitters and prices were down a solid 10% across the board. 2008 Land Rover Discovery HSE with TV’s and 30k miles? $32,000. A few weeks ago it would have been closer to 36k. Sale two had fewer buyers than any time since November 2008. An immaculate 1991 Chevy Suburban with 142k went for only $700. A 1998 Trooper? $500. A 1997 Avalon with only 43k original miles and dealer maintained? That was the surprise. $5700. Tthat one was a dogfight, though, and it was one of the very few.
Finally, a friend of mine had an auction with 63 dealer trade-ins. Out of those 63, he sold only 29. The first sub-50% sale he’s had since 2008. A lot of dealers have been used to asking, and getting, high prices at the sales due to the lack of good used supply at the auctions. Now that Cash for Clunkers has filled the dealers with too much inventory at a stiff price premium, the market is returning to an equilibrium that is devoid of fluff. With little to look forward to beyond Labor Day, most car dealers may soon find themselves in slash and burn mode come late October. As for new car dealers in particular? It’s a very scary time to have Suzuki, Land Rover, Porsche, Saab or Mitsubishi on your signage.
As for new car dealers in particular? It’s a very scary time to have Suzuki, Land Rover, Porsche, Saab or Mitsubishi on your signage.
Hasn’t that been the case for a while, though, particularly with Mitsubishi?
They have a dealer here that I seriously think is a Mafia money laundering operation…the same stock is on display week after week.
well that means my high mileage (but presentable AND reliable) daily drivers are worth 2 burritos and a pizza.
I think I’ll keep ’em and keep on driving them. Fixing them from time to time are STILL cheaper than a car payment.
“Now that Cash for Clunkers has filled the dealers with too much inventory at a stiff price premium … ”
I’m confused. How did scrapping almost 700,000 vehicles increase inventories?
Sounds like CFC might have soaked up the buyers, not increased inventories. Without buyers, even small inventory is too much.
I’m confused. How did scrapping almost 700,000 vehicles increase inventories?
The prices of used vehicles have shot through the roof, not the actual levels of inventory. One dealership I talked to said that they were now paying for 2008 Chrysler minivans what they were selling them for in December 2008. The prices are sky high right now at used car lots.
How did scrapping almost 700,000 vehicles increase inventories?
It has been my understanding that a lot of clunker deals included 2 trades – the clunker and something else. Also, I hear that there were a lot of deals done that did not involve clunkers, people who got to the dealer and couldn’t fight the new car fever. So I could see how with the bump in new sales, there would be a bump in trades as well.
John Horner
“Now that Cash for Clunkers has filled the dealers with too much inventory at a stiff price premium … ”
I’m confused. How did scrapping almost 700,000 vehicles increase inventories?
Well, for one thing, it meant a lot of people who would have been buying late model used cars or CPO cars were buying new ones, ignoring the used inventory. And now that the demand for those used cars was diverted to C4C deals, the used inventory is languishing on the lots.
used car values are plummeting in earnest.
Good, from what I’ve seen decent used cars just don’t seem to sell for a big enough discount vs. new.
A friend buy his daughter a corolla. They negotiated a price for an 09 walked across the street to check out a 07 and it was the same price.
Used car managers are now stuck with current inventories they purchased for way over book. Now as they age, they will be reluctant to wholesale them at a huge loss, for fear of the rath of the General Manager. That means lack of auction sales, and huge mark downs on the retail side will further drive the used market down towards reality.
Interesting. I have been watching Acura CPOs, one dealer in the area dropped his prices across the board yesterday by $1000-$2000. If the bottom is dropping out on my trade (not that it could go much lower) I can’t see any harm in waiting a bit longer.
Come spring I would think we get into the period where CPOs start to dry up since the 2 year lease window hits the start of the decline in the sales curve. Or maybe not.
Robert,
Do you think that anyone other than you, me or Mr. Ferry understands that picture here?
dgduris: “Do you think that anyone other than you, me or Mr. Ferry understands that picture here?”
I’m guessing it has to do with the Arthurian stories, but tell us more.
Roxy Music!! From the good old days!
Considering how bloody expensive new cars are it goes to show you how expensive the depreciation is.
A friend paid about 15 grand for his Trooper used about 8 years ago, what a money pit.
I hope it adjusts itself. I’m keeping my eye on 07+ Sport Tracs and i dont want to pay over 20k out the door.
Anybody who watches movies and/or can google ‘Avalon’ understands that picture. I can almost hear the movie soundtrack!
Hmmm! What movie was that?
This is the cover art from the Roxy Music album (yes, vinyl) called “Avalon.” Released in 1982.
Roxy music was headed by Bryan Ferry, ergo my reference in the original question to RF.
Do you think that anyone other than you, me or Mr. Ferry understands that picture here?
I did. (And now this song is stuck in my head.) http://www.youtube.com/watch?v=2zJdbpzfJMs
Demand for higher-end used cars seemed to really take a beating during C4C. It would appear that some who would normally consider a really nice used vehicle for $15-20K instead went for a lower-end used vehicle with a similar out-the-door price. I could have done the same, if for some demented reason a shiny new FWD econobox was more appealing than a low-mileage ’06 300C SRT8.
jmo :
A friend buy his daughter a corolla. They negotiated a price for an 09 walked across the street to check out a 07 and it was the same price.
When you are shopping for a used car, depreciation is your friend. There are plenty of perfectly good cars (i.e. not Aveos, G6’s or Sebrings) that depreciate like mad for the principal reason, far as I can tell, that they don’t say Honda or Toyota on the decklid. Those are the used cars to buy. Two months ago I bought a 2005 Town Car with 39K miles for less than $15K. That’s one-third the price of a new one, and it’s indistinguishable from a new one, well except for the options it has that are no longer available on a new TC at any price. I suppose I need to be thankful that SOMEONE out there is buying new cars, because that is the only way to get a supply of used cars, but I doubt that someone is ever going to be me.
If the Audi prez thinks potential Volt buyers are idiots, I can’t imagine what he’d call buyers of 2008 USED Chrysler minivan who are paying 2008 NEW prices. Idiots would be too mild.