Used Car Correction or Crash? MyCarlady’s Sarah Lee has spent twenty-two years in the automotive industry and “I have never seen anything like this. October 2010 could go down in history as record-breaking in used car price drops at the wholesale and retail level.,” she says.
- Consumers and dealers beware, eBay and Craig’s List postings won’t sell if the price isn’t right.
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After a year of rising used car values caused by the lack of new car trades and Cash for Clunkers, the auto auctions are beginning to show signs of a ACV: actual cash value retreat.
How quick will the prices reset themselves to normal values, those appropriate for the age and miles of the car in the sale lane? Immediately.
High line or luxury used cars and SUV’s BMW X5, Infiniti QX56, Toyota 4Runner, and sport sedans: Infiniti G35, BMW 335, Lexus ES350 and convertible coupes: Ford Mustang, Toyota Solara, Chrysler Sebring Convertible, Mazda Miata were the first to register drops of 5-8% in the last week of September. Car dealers are re-evaluating their existing inventory and realigning their trade-in offers accordingly. Used car wholesalers and dealership buyers are bidding cautiously, and only for brands and models they know sell well off their lots.
In Las Vegas, Nevada, Reno and nationwide, Used cars for sale: Pre-2006: Honda Accord, Nissan Maxima and Toyota Camry/Avalon sedans and 4wd sport utility and trucks also show a pull-back of 5% with more drop to come.
The 2011 new car arrivals pushed many cars off the traditonal bank lending rates and terms, making them less desirable and harder to finance, especially in a credit-challenged economy. Jeep Wrangler, Chevy Malibu, Ford Fusion, Hyundai and Kia sedans whethered the recent fluctuation. Many banks have moved from KBB to Black Book and NADA as a valuation for loan to value ratios in the midst of the fluctuating used car value scene.
I expect dealers to slow their used car auction purchases while trying to retail out of current inventory rather than take higher losses at the auction block. Auto manufacturers and dealers are assessing new car buyers appetites and buying intentions through auto show attendence and internet inquiry activity as the holiday season approaches.
Domestic and import car makers are adopting a wait and see position on increasing production and easing auto loan qualifications, in part based on the dollar and stock market response to mid-term political results.
If car manufacturers maintain production at 2010 levels it may have a positive effect on used car values by shoring up prices into second quarter 2011. However, this will not bode well for the US economy as consumption of raw materials and factory production of automobiles is a huge bell-weather of sales, consumer demand here and abroad.
Let’s hope car makers, auto auctions and dealerships find a happy medium delivering new and used car prices to satisfy consumer demand for cars and auto loans at reasonable prices. What we don’t need is another staged intervention which artificially manipulates the market.
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If you need any car buying, selling, trading or financing assistance on any new or used vehicle, please do not hesitate to email me at sarahlee@mycarlady.com,mvides422@gmail.com,carlady@cox.net or give me a call; 702-521-7546 I’m here to help you with any of your automotive needs and advice is free.
Sarah Lee is an automotive executive with 22+ years of experience. She writes about Cars, and is a staunch consumer advocate on car related subjects. Her company: MY CARLADY is a car buyer’s service committed to getting you the best deal on your next new or pre-owned vehicle. You can reach her at CAR DEALS
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