Surprise, surprise–your used car might be worth more than you thought it’d be in trade!  But the bad news is just as unusual–that new used car you’re looking at…surprise, surprise…is likely to cost more than expected.

Everything we’ve been expecting here for some months now–the bad economy driving up demand for inexpensive used cars coupled with cash for clunkers driving down the supply of said used cars, leaves a perfect storm for those interested in picking up a used car.

There’s fewer of them, more people want them, thus the price of them has gone up to make up for the short supply.  It’s economics 101, folks, but it doesn’t exactly help the overall picture.

But interestingly enough, the problem should also prove to be self-correcting.  Since the prices are up, as is the case for anything that’s in high demand with a slim supply, fewer people will be inclined to buy.  Thus, prices will have to come down just to get people back in the door and buying again.  The consumer’s capacity for consumption has fallen off a cliff in recent months–any huge price hikes will be met with resistance.

And this in turn should, in six months to a year or so, drop prices back down.

Continue reading...

Well, folks, apparently it’s continuing on.  The problem we reported on earlier with Cash For Clunkers having the unintended consequence of drying up the used car market is getting worse.

Used cars in general are getting more scarce, and those that remain are going up in price despite the overall weakness of the economy.  But, in a bit of good news, this also means that your used car is worth more in trade if you’re looking to trade your car in for a newer model.

Car dealers express it best this way:

“Most of our sales, maybe 90 percent of it, is in the 5-year-old and older cars,” he said. “You ask me how many of those we didn’t sell – every one of those in a Cash for Clunkers deal, whatever that number is.”

Supply and demand comes back to haunt us all.

Continue reading...

It’s not a surprise that dealers would say this, at least those in Colorado Springs, but according to them used cars are about to get a whole lot tougher to find and cost a whole lot more.

Basically, it’s Cash For Clunkers that did the used car in, say dealers, who further elaborate that the wholesale market for used cars has seen price hikes of two to three thousand dollars.  Most of the cars that would have gone onto used car lots are now instead languishing and waiting their inevitable destruction after they’d been traded for better, more fuel efficient rides.

Clever, really–with fewer used cars on the market, more people in need of a new car will have little choice but to buy new.  Of course, this is all sort of a joke anyway, because in about two to three years, all the new cars today will probably wind up as used cars when people go to trade them in on new cars once again.  Sure, consumer spending is down, but it’s not out, and a new car will always be high on some folks’ lists.

Continue reading...