According to Thursday’s Wall Street Journal, the U.S. auto market is now craving used cars so much even dealers are seeking out used regular consumers’ vehicles to buy them for their own inventory.
Doug Waikem, an auto dealer in northeast Ohio, said, “I am spending more time now trying to buy cars than sell them.” He even checks Craigslist regularly for used-cars postings, as well as leasing billboards close to rival dealers offering his willingness to buy used cars.
He added that he makes more money from people’s cars they are selling than from those he gets from wholesale auto auctions. Waikem said, “Right now, you turn on the news, it is all bad economic news except for auto sales and housing. It is a combination of some of the lowest rates in history, and the highest used car values in history.”
Reasons for the sudden yen for used cars include the decline of new car sales between 2008 and 2010 and the vanishing of new-car leases around the same time. This meant three-year-old cars were scarce and older cars became more in demand. Another reason is the three major U.S. auto makers cutting excess production, which means fewer new cars leased to rental car companies that would subsequently be sold as used cars.
Last year, the used car market climbed 5% to 40.5 million. Melinda Zabritski, director of automotive credit at the consumer credit rating firm Experian, said it may be possible that used car prices will match new car prices, but “that is not going to last long. Now is a good time to trade in your used car if you have one.”