New Car Sales Slowdown Leads To Higher Used Car Prices

Plenty of media coverage has been given over to stories concerning the plummeting sales that have affected not only troubled domestic automakers such as and , but also Japanese corporations , and . Most of these companies have a huge stock of unsold vehicles sitting in ports or in storage facilities around the world, meaning the dealers are under increased pressure to apply as many incentives as they can to get new cars moving out the door. This has meant drastic price drops almost across the entire board - when it comes to buying a brand new car, there has never been a better time to . A side effect of this slowdown, however, has been a proportional rise in the price of . With the recession causing many car shoppers to hold off on paying new car prices and instead opting for automobiles that are a few years old, demand for secondhand vehicles has shot through the roof. Bargains are harder to come by due to the fact that the sheer volume of people browsing through online classified and auction sites has increased by an order of magnitude. The situation on dealer lots is made worse thanks to an unexpected consequence of poor new car sales. A significant portion of the found at the dealer are acquired via trade-ins. When a buyer purchases a new car and negotiates to trade in their former vehicle to drop the sticker price, they usually get far less than the open market value of their automobile. This allows dealers to offer , as they do not have to mark up the price to any great degree in order to make a tidy profit. However, as the tide of car sales has turned against new car dealers, their supply of quality used vehicles has also begun to dry up, forcing them to pay higher wholesale prices at auctions in order to maintain their stock. This in turn translates into higher prices for consumers who initially started out trying to save some cash over buying new. Given this set of circumstances, car shoppers would do well to compare the cost of a new entry-level car to the price they are paying for a used edition of the same model. Rising secondhand prices combined with deep discounts on current inventory might have reduced the gap between the two prices far more than would have been expected.