Used car prices hit record high in April

May 10, 2011 12:20:50 AM PDT
Prices for used cars hit a record high in April and are expected to climb even higher. It seems car production cutbacks in this recession are making used vehicles a hot commodity.

"Today, I'm noticing the prices indeed are a little bit more than I expected," said used car customer Vance Harper.

Since January, the Kelly Blue Book says the average trade-in value for a mid-size car rose nearly $2,000.

"I was expecting to spend between $9,000 and $11,000, and I'm finding between $16,000 and $17,000 for the cars I'm looking for," said used car customer Rosenberg Hernandez.

High gas prices are slowing down the market for new cars. Owners are hanging on to their old ones, so fewer trade-ins are making it to these used car lots.

The Oakland Honda used car lot usually has about 80 vehicles on it, but these days they only have about 55.

"I buy cars on weekly basis," said Rob Matar from Kool Running Autos.

Matar is one of hundreds of used-car dealers who buy their vehicles from the Manheim Auto Auction in Hayward. About 3,000 cars use to be auction off each Wednesday, but now, only about 1,000 and the prices are 20 to 30 percent higher.

"An '03-'04 Lexus 470 I used to pay maybe $17,000, $18,000, $20,000 for it. Now, if, if you see it go through the auction, you can't touch it for less than $25,000 maybe to $30,000 grand," said Matar.

Now some used car prices are just a few thousand dollars shy of the exact same brand new one.

"If you can negotiate a good deal on a new car, with zero interest, or zero down, zero interest... in a lot of instances it makes sense to buy a new car versus a couple-year-old used vehicle," said Matar.

Now U.S. dealers say they're expecting to exhaust their inventories and there could be a severe shortage of more economical Japanese cars by July.

"I guess acting sooner rather than later is the key here," said Harper.

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