Shortage of quality used cars makes it a seller's market
CHARLESTON, W.Va. -- Nearly 500 brand new cars will be in the Charleston Civic Center this weekend for the 2013 West Virginia International Auto Show.
The thousands who walk the show floor over the weekend will dream about taking one of these latest models home with them. They'll wonder whether trading in their current vehicle can help bring down the cost.
Fortunately for car owners, area dealers say it's a seller's market for good-quality used vehicles.
"You have no idea what your used car is worth today," said John Knight, general sales manager at the Joe Holland dealership in South Charleston
Knight said used cars are in short supply on today's market, and it's helping to prop up prices for trade-ins.
"As we came into 2012, it was starting to get difficult to get good quality used cars," Knight said. "It's become more and more important for us to be very aggressive when a customer is here looking at a new car, to get that trade-in."
Richard Stephens, general manager at Stephens Auto Center in Danville, said the tight used car market is a lingering effect of the Great Recession.
"We've had this trickle-down effect in the used car industry," he said.
Prior to the financial crisis in 2008, car manufacturers were putting more than 16 million new vehicles into the market each year.
Once the economic meltdown hit, new car sales plummeted by about 5 million vehicles.
While it didn't have an immediate effect, that reduction in sales translated into a loss of supply for the used car market in later years.
"When less new cars are sold, then the next year that means there are less one-year-old cars on the market," Stephens said.
Also, during the height of the recession in 2008 and 2009, more people bought pre-owned cars instead of new ones. That also pushed up prices on used vehicles.
Economic conditions have improved, and the supply of new cars also has rebounded.
According to the National Automobile Dealers Association, more than 14 million new vehicles were sold last year and more than 15 million are expected to be sold in 2013.
That will help boost supply in the pre-owned market in coming years.
"It didn't rebound immediately; it's very slowly ratcheted back up," Stephens said. "Still, compared to normal times, there's this lower supply of used car inventory."
"As manufacturers keep rolling out higher numbers of new vehicles, it should balance back out," he said.
Knight said another factor helping the pre-owned market is the Internet.
Today's consumers are much more knowledgeable about the worth of their vehicles and what they should get on a trade-in.
Knight said this is good for both customer and dealer because both realize the vehicle's value on the open market.
"It creates more transparency," Knight said. "I absolutely believe it's nothing but a help to everyone — the consumer and the dealer."
The Daily Mail will conduct a special Auto Show live blog beginning at 10:30 a.m. today.