As the recession drives car buyers to used car lots over new car dealerships, the prices of those pre-owned autos are climbing across the country and in the Mid-Ohio Valley.
"Prices are going up and going up so fast that the NADA books and other (car value) guides are not able to keep up," said Jerry Nestor, sales manager at Pioneer Family Pre-Owned Autos in Williamstown. "I don't know if I've ever seen it like this."
Used car prices for July 2010 were up 10.3 percent for the average three-year-old vehicle from the same time last year and in some cases were more than 30 percent higher, according to Edmunds.com, which estimates car values as part of its coverage of the automotive market.
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There is a limited supply of vehicles, thanks to people hanging on to their cars longer due to a lack of confidence in the economy, as well as the federal Cash for Clunkers program, which took hundreds of thousands of used cars off the market, according to industry experts.
"That's had a big impact," said Bob Racy, owner of His Automotive in Belpre. "I'm sure some of those cars were really on their last legs, but a lot of them were still in demand. Trucks and SUVs are still popular, and people can't afford the newer ones. For the most part, Cash for Clunkers hurt us."
When he and other used car dealers go to auctions, prices are way up, said Racy.
Fact Box
| The biggest movers | |||
| among used vehicles | |||
| Average used vehicle true market value | |||
| July | July | Percent | |
| Model | 2010 | 2009 | % change |
| Cadillac Escalade | $34,715 | $25,600 | 35.6 |
| Chevrolet Suburban | $27,193 | $20,262 | 34.2 |
| Dodge Grand Caravan | $15,629 | $11,661 | 34.0 |
| BMW X5 | $40,843 | $30,711 | 33.0 |
| Acura MDX | $29,852 | $23,109 | 29.2 |
| Source: Edmunds.com |
"The buying public thinks we're price gouging when we raise our prices, but we're having to pay a lot more," he said. "And in a small market like we're in here, when we're going to get cars we're there competing with all those dealers in larger markets. But where are we going to go? You have to go where the cars are."
Nestor said auction prices have sharply increased during the recession.
"A lot of times we'll sell a vehicle and it will cost us more to replace it," he said.
The soaring prices have buyers a little concerned as well.
"I've been looking and haven't found a lot in my price range," said Brittany Wells, 22, of Marietta. "There are some nice used cars, but I need one that's older than just a few years old."
Wells said she's had friends and family tell her they think Cash for Clunkers is part of the problem.
"It means there are a lot less cars out here," she said. "I could be driving one of those cars now. I just need one for a few years until I can save up for something better."
Even with used car demand up, local car sales remain down in the down economy, said some local dealers.
"My business as a whole has been a lot slower in the last year-and-a-half or two years," said Racy. "Demand for used cars may be up, but I don't think there's much demand overall."
For the first two years he owned the dealership, cars were sold within 30 days, he said. For the last two years, it's been a different story.
"Now I can almost plan on having them 60 days, or some 90 days," Racy said. "It hurts."
Though he's seen more and more people interested in pre-owned cars, Nestor said he agrees that it's still a tough market.
"I don't think either new or used car dealers are selling what they want to sell right now," he said.
