News Column

Used Car Sales Fall as New Car Sales Rise

August 13, 2013

Patrick McCreless

auto dealer
Car dealer (file photo)

Avery Auto Sales manager Donald Parton hasn't seen much traction in used car sales this year.

"It's been up and down, no continued spike in business," Parton said of the Oxford used-car dealership. "This past year, we think we're coming back, but then the next month we'll have a flat month."

Parton isn't the only used car dealer facing a sluggish market. Prices and sales of used vehicles are down this year, auto industry experts say, a trend driven by steady success in the new car market and a still-recovering economy.

A Bureau of Labor Statistics consumer price index report released Monday shows used-vehicle prices nationwide dropped a total of 0.5 percent in May and June. Meanwhile, according to car-shopping website Edmunds.com, overall used vehicle sales were down 3.4 percent between January and June.

Parton said used vehicle sales at Avery are not nearly as bad as they were in 2009 and 2010 when the entire auto industry was suffering from the Great Recession. Still, sales are not as good as they could be, a problem Parton blames on lack of inventory.

"There are not as many quality used cars available," Parton said. "There's a lot of high-mileage, older stuff, but what the market's looking for is newer, low mileage."

Richard Arca, senior manager of pricing for Edmunds.com, said the new car market has taken many sales away from used car dealers this year. Arca said that since the recession hit, new-car dealerships have started offering better incentives, making new vehicles more attractive to consumers.

"It's so cheap to get into a new car now," Arca said.

Arca added that due the economy, more consumers held onto their older cars longer than normal and now there is pent-up demand for new vehicles. That combination has meant fewer, relatively new cars in the used-car market and lower prices for used cars due to decreased demand.

The new vehicle market has indeed been growing with year-over-year increases in sales so far this year. For instance, all the vehicles made at Honda Manufacturing of Alabama in Lincoln had double-digit sales increases in July compared to the same month last year, including a 67.7 percent jump for the Ridgeline pickup truck and 10.9 percent increase for the Odyssey minivan.

James Cheatwood, sales manager for Sunny King Honda in Anniston, said sales there were up 20 percent in July compared to the same month last year.

"We had a great month last month and so far this month is doing well," Cheatwood said.

Cheatwood said a combination of good incentives plus popular new fuel efficient models has helped drive sales.

Arca noted however, that used-car sales could pick up in the coming months as prices continue to drop and more people start trading in their older vehicles for new ones. Used car prices tend to decrease in the fall, which is when auto manufacturers unveil their latest models. Arca said Edmunds.com predicts 15.4 million vehicles will be sold this year, about 1 million more than last year.

"If you consider that about one out of every two car purchases involves a trade-in, that's half-a-million more used cars that will be sold this year," Arca said. "We believe supply will grow gradually."

Frank Miles, owner of used-car dealership Frank Miles Auto Sales in Jacksonville, said his sales have been lackluster so far this year.

"I'd say it's been about average as it was this time last year," Miles said. "There has not been a definite increase."

Miles said he and other used-car dealers he's spoken to have had problems finding the vehicles that people want to buy, such as those with more fuel-efficient, four-cylinder engines and trucks with four-wheel drive.

"I try to keep a mixture of cars but I don't have a good mixture of four-wheel drive pickups," Miles said.

Miles said the sluggish economy is still making used cars less affordable for many consumers.

"I do sell quite a few cars for cash, it's just hard to find people who can put a down payment," Miles said. "It's the economy ... people are struggling to pay the rent and everything and now people are paying for school right now."

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.

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(c)2013 The Anniston Star (Anniston, Ala.)

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