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Demand for used vehicles accelerating

Staff file photo by MICHAEL EGGER

The Cash for Clunkers program cut into what would've been the flow of cars going into the used market.

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The Orlando Sentinel

Published: November 14, 2009

ORLANDO - Dale Sharp's 6-year-old Honda minivan had been reliable, but was no longer needed. So Sharp advertised it for sale for $8,000.

"The first caller bought it for the asking price," said Sharp, of Orlando. "No negotiation."

The ease of the transaction wasn't surprising. Used vehicle prices jumped an average of 16 percent in October compared with a year ago, according to Edmunds.com, an automotive information Web site.

Leading the rise are minivans such as Sharp's, up 27.1 percent. The Web site shows increases for 14 of 15 vehicle categories, with the only decline being a 1.6 percent drop in the price of mid-size cars.

The dramatic increase stems from basic economic principles, said Joe Spina, analyst for California-based Edmunds.com. "Used car supply is down, and demand is up," he said.

The supply has diminished for several reasons, Spina said. One is because many vehicle manufacturers cut their leasing programs several years ago, meaning there are fewer vehicles coming off lease and entering the used market.

Another reason is the federal "Cash for Clunkers" program, which gave consumers an incentive of up to $4,500 to trade in older vehicles for new ones. Those older vehicles were destroyed, meaning nearly 700,000 vehicles that could have ended up in the used car market were eliminated.

And finally, new car sales are down - especially after the "Clunkers" program ended in August, so fewer customers are trading in their used cars.

Meanwhile, demand is up because many traditional new car shoppers are now considering used because of the economy, Spina said.

All the price volatility "is making the used car business very difficult, very complicated," said Ron Thurston, one of the owners of Thurston's Used Cars in Clermont. "Five years ago, we could pretty much predict what the market would do - what would sell and for how much. It's impossible now."

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