“This is not your father’s Oldsmobile,” one domestic carmaker once told consumers in advertisements. Well today, this is not your father’s car-buying market. Some conventional wisdom, traditional financial advice and automotive truisms are out the window in what has become one of the wackiest car-buying markets in a generation.Some lightly used cars cost almost as much as new cars; some models from Japan are scarce after production was disrupted by the earthquake and tsunami there; and leases, which virtually went extinct a few years ago, are back with a vengeance.“Right now we have such a unique set of converging events, pressures and dynamics occurring,” said Rick Wainschel, vice president of automotive insights for AutoTrader.com, an online marketplace for new and used vehicles. Here is some advice that doesn’t necessarily hold true in today’s market.You can still save a little money buying a 1- or 2-year old model, if you can find one. But used cars are so hot right now, especially fuel-efficient ones, that you’re unlikely to save nearly as much money as you used to.“One of the biggest differences in the market today is the values of late-model used vehicles are really at all-time highs,” said Alec Gutierrez, manager of vehicle valuation for Kelley Blue Book.For example, a year-old Ford Focus in 2010 sold for $9,625. Now, a year-old Focus would sell for $12,825, up 33 percent, according to Kelley Blue Book. Similarly, the Hyundai Elantra is up 36 percent. Most dramatic: a year-old Toyota Prius sold last year for $15,650. Today, a year-old Prius is valued at $21,850, up $6,200, or 40 percent. The Manheim Used Vehicle Value Index, a monthly barometer of used-car prices, was near a record high in June, bested only by May.“The level and steepness of the run-up has been unprecedented,” said Tom Webb, chief economist at Manheim Consulting. Used compact cars, in particular, are selling for about 20 percent more than last year, according to Manheim.“In a lot of cases, 1- to 2-year-old cars have been approaching new-vehicle pricing,” Gutierrez said. “That is something we’re not used to seeing in the new-car marketplace. Usually, we would advise consumers to buy a 1- to 3-year-old vehicle. That, quite frankly, is just not the case anymore.”Used cars cost more because they’re in short supply. Consumers are holding onto vehicles longer, sluggish new-car sales in recent years led to fewer used cars now, and fewer vehicles are coming off consumer leases and from rental fleets, Webb said. Even vehicle repossessions are down, as banks clamped down on auto lending standards, essentially making sure that consumers didn’t borrow too much money. That has kept the repo man at bay and used cars out of the market.Conventional wisdom says you’ll get far more for your vehicle if you sell it yourself, rather than accept a dealer’s trade-in offer. But today, with used cars in demand, dealers are offering top dollar for trade-ins, especially for desirable models in great condition with low miles. That tightens the dollar gap between trading in a vehicle and selling it yourself, which involves far more hassle.Higher prices affect used-car dealers too. They must pay higher wholesale prices at car auctions. So they’re likely to be a lot more interested in your trade-in.“Dealers are willing to pay more for a trade-in they can see and value, rather than taking their chances at the auction,” said Larry Gamache, spokesman for vehicle history information service Carfax. “Dealers are 100 percent more willing to appraise trade-ins more generously.”Gamache said he recently traded in a 2004 Jeep Wrangler. The trade-in value was about $1,000 less than what he might have gotten as a private-party sale. While the difference is not chump change, it just wasn’t a big enough difference to be worth the hassle of selling the vehicle himself, he said.“If you have a clean car right now with the right miles for the age of the car, there’s no telling what it could be worth,” said Bob Wasik, general manager at Oak Lawn (Ill.) Toyota, who has been dealing with low inventory for both new and used cars. That’s especially true for hot models, such as the Prius hybrid, he said. Dealers are able to sell a used Prius for nearly the price of a new one because supply is so limited.
From / Gulf Today