Discount cars and vans continue to be scarce and expensive

Pre-owned automotive sales are once again on the rise, which means a drop in the availability of cheaper stock. The used markets are in their highest averages for the past seven years. Just the previous month alone, the prices of three year old cars and vans jumped upward by over 10%, to almost 20,000 per, compared to the figures in the July 2009 period.

Its simply a equation of supply and demand, once the roads were rife with less fuel efficient, but slightly more affordable vehicles. However the “cash for clunkers” scheme proved problematic for many, as it required the older cars and used vans to be destroyed, as opposed to them being resold on the market. Although a short boon was had by retailers, very few affordable vehicles were left on the road for consumers, and the demand for them remained.

In addition, lower stock means fewer vehicle turn over for car and van rental and leasing companies, as the larger auto makers began major cutbacks and limitations in production during the 2008 crisis.

“People are hesitant in making big-ticket purchases, that’s why we’re seeing a drop-off in new vehicle sales,” said Alec Gutierrez, lead analyst for vehicle valuations at consumer guide KBB.com. But just because you’re hesitant doesn’t mean you don’t need to buy a vehicle.”

The analysts are continuing to notice the spikes in the pre owned markets due to the cash for clunkers, which saw the government spend $3 billion that helped sell 677,000 vehicles. However the market prices continue to increase in the months following the end of the scheme.

The supply and demand issues are making dealerships look into alternative methods of stocking up their lots, such as browsing the local classifies for bargains or even online classified websites such as Craigslist and eBay.
For many, it will remain a problem, with many customers of retailers being shocked that they didn’t realize how much used cars and vans are to buy.

“It’s a tough time to buy a used car, and it’s more important than ever to do your homework before shopping,” said Philip Reed Sr., consumer advice editor for Edmunds.com. “For example, decide ahead of time how much you are willing to spend and keep yourself to that limit.”

Specific models of cars and vans are also more desirable and thus more pricey than others, showing the shift in consumer perspective and needs. Such models as the Cadillac Escalade, Chevrolet Suburban, Dodge Grand Caravan, BMW X5 and Acura MDX, have sky-rocketed in asking price by almost 30 percent or more in July, compared to a year earlier, according to Edmunds.com.

“Auctioneer Mike Maltese said. On average, the price of a used car that once sold for $2,000 is up 40 percent and a $3,000 car is now selling at auction for $4,000. In the past, if a car had 92,000 miles on it, you’d say it only has 8,000 miles left on it,” said Maltese, 56. “Now, anything under 100,000 miles is gold.”