Intense demand for compact cars has sent sales volume — and pricing — higher, even on pre-owned inventory.
During June, the wholesale prices of used compact cars increased about $300 to $7,376, according to ADESA Inc. statistics. Within the pre-owned market, dealers are selling compact cars well beyond their Blue Book assessed values and making great returns.
“In the past 90 days there has been a [buying] frenzy for pre-owned compact four-cylinder cars,” said Doug Deakin, a salesman at Toyota City, in Mamaroneck, N.Y. “Everything I have gotten in has sold immediately.” The market for four-cylinder cars has increased 10% to 15% from last year, Deakin said, with the most popular sellers being the Camry and the Prius Hybrid.
At Honda of New Rochelle, 2006 and 2007 Civics and Accords are being sold for the same prices as new ones, said Nick Belli, a salesman at the New York dealership.
“The Blue Book prices on Accords and Civics have gone up $1,000 since last year because of demand,” he added.
Robert Albert, sales manager of Colorado River Ford in Bullhead City, Ariz., said pricing has shot up on older model Focuses, Cobalts, Aveos, and Escapes, too. “Essentially all the four-cylinder models that were thousands of dollars behind book [value] are now well over book [value],” he said. “Values on pre-owned small cars have increased 30% to 40% over the past year.” At Colorado River Ford, these compact cars sales comprise 33% to 40% of weekly sales.
Negative equity has also become a growing problem as a result of the rush to trade in larger vehicles. “People are now looking at negative equity due to the fact that they are trading in their large trucks like the F-150 for smaller, more fuel-efficient ones,” Albert said. “The problem is that the value of these large trucks has depreciated so much that they owe a substantial amount of money on their trades. Customers end up having to put thousands and thousands of dollars down.”
