So much for fuel efficiency.
A year ago, with gasoline selling for more than $4 a gallon, drivers abandoned their trucks and large SUVs for compacts. Now, with prices around $2.50, they’re going back to the big guys, at least in the used-car market.
That U-turn has led to a 5.8 percent increase in the price of used cars in the past year — including a 16 percent spike since the beginning of the year — and a shortage of the vehicles drivers were unloading last summer, according to the Manheim Used Vehicle Value Index.
To Richard Fernandez, the survey confirms what he sees every day at the Ford store where he is the senior sales manager. Used car sales are down more than 25 percent from a year ago, but he cannot get some of the most popular models.
“Our used-car lot used to have twice as many cars,” Fernandez said. Included is just one Expedition, the biggest and least fuel-efficient in the Ford inventory.
“I can’t even get them,” he said. “No one is trading them in.”
Dealers, who buy most of their cars at auction, have been able to pass higher auction prices on to retail customers, so the increase in wholesale prices has not hurt them, Manheim said.
“But, the cause of higher wholesale prices does stem from a negative — namely, the significant reduction in potential supply available to the auction industry,” the report said.
The biggest price gains since last June were for pickup trucks (up 27 percent) and sport-utility vehicles (25.8 percent), while compacts fell almost 10 percent and midsize cars were off 3.4 percent.
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Also to blame? Uncle Sam
Several factors have contributed to the vehicle shortage, in addition to the reduction of trade-ins, said Richard Fernandez, who works for a Ford dealer.
One is the government’s new “Cash for Clunkers” program, which will provide up to $4,500 toward the purchase or lease of a new car for consumers who turn in an old, inefficient car, Fernandez said. That could help boost new-car sales, which is the goal, but it means even fewer used cars because the dealer cannot resell the clunkers.
Also, new-car dealers used to get a lot of leased cars for resale, “but we’re not buying them,” Fernandez said. Because of the high residual price — the result of lease deals built on low monthly payments — “it’s not worth it to get them.”
— Kevin DeMarrais
