Since the earthquake in Japan, used-vehicle prices have become so volatile that price experts are scrambling to keep up. Dealers, anticipating new-car shortages, are going beyond usual channels to stock used cars, often paying more for those vehicles and then worrying about having shelled out too much.
Prices already were high. The recession led to a shortage of used vehicles, and when demand rose as credit eased for used-car customers, prices soared. Then the quake struck.
Reduced production by Japanese automakers, such as Toyota Motor Corp. and Honda Motor Co., and the threat of production cuts by virtually all automakers means a reduced new-vehicle supply. Dealers who are short of new vehicles look to the used-car lot to meet demand.
And prices could go even higher. If new-vehicle incentives dry up, as many predict, prices of used vehicles will rise as new-car transaction prices go up.
Ricky Beggs, managing editor of Black Book, says he sometimes thinks used-vehicle prices are "as high as they can go, because the one- and two-year-old car is bumping against the new-car transaction price. But if you raise the transaction price of the new a little bit, that gives the used room to come up as well."
NADA Used Car Guide predicts that with incentives scheduled to expire and some automakers announcing sticker-price increases, average transaction prices on new compact cars such as the Honda Civic, Toyota Corolla and Ford Focus will climb about $850 by the end of June. That in turn will add at least $650 to the price of a typical three-year-old compact by July 1.
That is on top of earlier gains. From March 8 to 29, for example, the price of a 2010 Toyota Corolla sedan jumped $863 to $13,081, NADA Used Car Guide says.
Jonathan Banks, senior director of editorial and data services at NADA Used Car Guide, says prices of compact cars typically are flat from March to April, but the price of that 2010 Corolla rose another $422, to $13,503, in the first two weeks of this month. He believes the industry will see high prices for much of this year.