Local used auto dealerships are facing a dearth of inventory and increased costs as demand for pre-owned vehicles rises.
Tim Anastopoulos, owner of Anastos Motors, said scarcity and demand are driving prices higher, which makes it far more difficult for folks on a tight budget to attain a quality used vehicle.
“The prices are kind of high right now for used vehicles — demand is driving the prices higher — because there’s no new cars on the market,” Anastopoulos said. “The manufacturers are struggling to put new cars out, so it makes the demand of used cars that much higher.”
Anastopoulos said his dealership, 4513 Green Bay Road, would normally have about 110 vehicles on site. They only had 60 last the first week of the 2022. The dealership specializes in two- and three-year-old vehicles with low mileage. They’re 30-35% more expensive than about a year ago.
“The price of a two-year-old or three-year-old car is high,” he said. “The older cars, which are out there, are problem cars with high miles and are going to be something we do not sell here. We’ve been here for 30 years and when we get those cars, they need so much reconditioning.”
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Anastopoulos said he’s even taken trade-ins from customers, some of whom are making out better than ever with their car purchases.
“I’ve taken trade-ins from customers that I sold cars to, and I’m giving them more money than they paid two years ago,” he said. “In 30 years of my career in the car business, I’ve never seen anything like that.”
No additional revenue for dealer
Matt Lindstrom, owner of Car Corral, 6000 49th St., expressed similar sentiments.
“There’s been an increase in demand for certain vehicles like SUVs and pickup trucks, and the value of those has definitely gone up,” he said. “You can’t get new cars, and the demand is still there for trucks, which has always been a hot thing.”
Lindstrom said he has vehicles to sell, but the costs associated with purchasing new vehicles have risen about 30%.
“In the used car market, from the wholesale end of things, things are up an easy 30%,” he said. “It doesn’t help us at all. We’re paying so much more for vehicles. We’re not making any more of a profit margin or anything like that. We’re buying them on the wholesale market and then selling them on the resale side after reconditioning them.
“It’s not like we’re making any more money on them. It makes it harder because you have to explain to customers why we’re charging more for them.”
Lindstrom said the market “shows no signs of letting up” anytime soon.
Scott Dooley, co-owner of Carbox, 1750 22nd Ave., said he’s committed to helping as many people buy a used vehicle as possible.
Dooley said he’s been purchasing a lot of vehicles off the street. He said he will even cross state lines to purchase a vehicle.
“Whatever we can find that’s quality and super affordable is what we will do,” he said. “Everybody else is raising their prices and we are keeping ours the same. Other dealerships have been interested in buying our cars, which is a wild thing. I never thought that would happen. We sell half of our cars to other dealerships because they don’t have any. It’s been a good deal for us.”
Prices rise nationally
The average price of a used vehicle in November, according to online car shopping site Edmunds.com, was $29,011 — about 39% more than just a year earlier.
The blame can be traced directly to the pandemic’s eruption in March of 2020. Auto plants suspended production to try to slow the spread of COVID-19. As sales of new vehicles sank, fewer people traded in used cars and trucks. At the same time, demand for laptops and monitors from people stuck at home led semiconductor makers to shift production from autos, which depend on such chips, to consumer electronics.
“Demand on any car was low, so they cut down on their supplies and went to the chip manufacturers and said ‘We don’t need anymore,’” Anastopoulos said. “When the market came back up, the (chip manufacturers) were focusing on making chips for electronics.”
When a swifter-than-expected economic rebound boosted demand for vehicles, auto plants tried to restore full production. However, chip makers couldn’t respond fast enough. On top of that, rental car companies and other fleet buyers, unable to acquire new vehicles, stopped off-loading older ones, thereby compounding the shortage of used vehicles.
Bleak as the market is for used-car buyers, the computer chip shortage has also driven new-vehicle prices higher. The average new vehicle, according to Edmunds.com, is close to $46,000.
Even so, prices of used cars are likely to edge closer to new ones. Since the pandemic started in early 2020, used vehicle prices have jumped 42% — more than double the increase for new ones. Last month, the average used vehicle price was 63% of the average new vehicle cost. Before the pandemic, it was 54%.
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