Dealers going beyond usual channels to stock used cars due to Japan crisis

Article by Christian A., on April 16, 2011

Dealers are going the extra mile to obtain used cars as preparation for an anticipated shortage in new vehicles. Since the March 11 earthquake in Japan, the prices for used vehicles have been so volatile that the dealers often pay more to acquire these units.

Even before the earthquake, prices for these cars have been high. The recession has caused shortage of used cars, and prices rose as credit eased for individuals opting for these vehicles, increasing the demand.

Now, the market will see a reduced supply in new vehicles, as the March 11 quake forces Japanese automakers such as Honda Motor Co., and Toyota Motor Corp., as well as virtually all car manufacturers, to reduce production.

Such scenario also forces dealers who are short of new vehicles to search out for pre-owned ones to meet the demand, which means that prices can rise even more. In addition, as incentives for new vehicles dry up as generally forecasted, used-vehicle prices will increase along with new-car prices.

Black Book managing editor Ricky Beggs said that he sometimes thinks that prices for used cars can go as high as they can, as a one-year-old or two-year-old vehicle is nearing the new-car transaction price.

This means that if the new-car transaction price is raised a little bit, there is room for the prices of the used ones to go up as well. NADA Used Car Guide forecasts that the average transaction price on the new compact vehicles like Ford Focus, Honda Civic and Toyota Corolla will go up by as high as $850 by the end of June, considering that some automakers are announcing sticker-price increases and incentives are scheduled to expire.

If you liked the article, share on:

Comments

Recommended

It has been nearly eight years since Toyota entered a new era of sports cars when it officially unveiled the production version of the Toyota 86 – also known as...
by - February 27, 2019
The new Audi TT RS – yes, the top version of the German carmaker’s facelifted TT model series – is now officially here. If you could remember, the range-topping TT...
by - February 18, 2019
Nearly half a year ago when McLaren Automotive unveiled the McLaren 600LT Coupe, the British carmaker is now introducing a version that lets its passengers enjoy the thrill of an...
by - January 25, 2019
German carmaker Volkswagen is now making the latest evolution of the new Volkswagen Golf GTI -- the new Golf GTI TCR. First unveiled as a concept at the annual GTI...
by - January 24, 2019
It has been three and a half years since BMW unveiled the sixth generation of the BMW 7 Series. Thus, it is really about to give the 7 Series a...
by - January 17, 2019