Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 10, 1990 TAG: 9006080758
SECTION: BUSINESS PAGE: A-17 EDITION: METRO
SOURCE: Cox News Service
DATELINE: ATLANTA LENGTH: Medium
But "I didn't do any good," Graham said of his fruitless search, a week after the 10-day ad expired. He received phone calls from people who thought he was trying to sell a car. "But I don't want to sell a car. I want to buy one," he said.
When Graham, manager of Graham's Amoco in Tucker, Ga., shops for a car, he prefers buying used vehicles for sale by private owners. "You can usually get a less expensive car from an individual than a dealership," he said.
Classified ads brought nibbles in the past. But this time, he said, "There doesn't seem to be much to choose from."
Like a number of consumers out to avoid new-car costs, Graham is finding demand for used cars up and supply down, which is pushing prices up. For example, a 1990 Ford Escort at Crown Ford, a suburban Atlanta dealership lists for $11,000; the same model a year old fetches $6,988, according to Mac Wise, used-car manager. One year ago, a year-old car of the same model was bringing about $6,000.
He said the Alpharetta dealership normally sells more used cars in the $2,500 to $4,500 price range, "but there aren't nearly as many out there as there used to be."
Auto industry observers blame the used-car crunch on declining new-car sales. Those sales by franchised dealers dropped 7 percent last year, while used-car sales rose 3 percent, according to Tom Webb, chief economist at the National Automobile Dealers Association in Washington.
"Used-car sales usually follow new-car sales because people trade used cars to buy new ones," Webb said. Franchise dealers corner one-third of the used-car market; independent dealers about 10 percent, he said. But more than 50 percent of used-car sales are through private transactions, and individuals are holding onto their cars longer.
"More people are keeping their cars because they got into five-year loans and find they're upside down on the equity" the car depreciates faster than the loan is paid off, said William Appel, executive director of the Georgia Independent Automobile Dealers Association. "Other people, instead of trading for new cars, are trading for late-model used cars and avoiding the first-year depreciation."
The growing market for "nearly new" used cars is a relatively new phenomenon that exploded in the last year or two, said Lynn Weaver, associate editor of NADA's "Used Car Guide."
"The gap between the price of a new car and a nearly new car makes it easier for a dealer to put a buyer in a used car, especially when new-car sales are slow," he said. He said the average price for a 2-year-old mid-sized used car is about $8,000, versus $14,000 for a comparable new car.
Sales at Atlanta Used Cars in Lilburn are up 25 percent for the first four months of this year compared to last year, according to Wynn Cline. Cline heads the installment loan department at Trust Company Bank, which in 1987 set up Atlanta Used Cars because of a growing number of repossessions and returns of leased cars.
"It also seems like we're also financing a higher percentage of used cars for the dealers we do business with," he said. He said Atlanta Used Cars usually keeps about 100 cars on its lot, most one to two years old. There are some 1986 and 1987 models, he said, "because of a lot of demand for cars priced around $5,000," common for those model years.
Many major financial institutions are financing more used cars, according to NADA's Weaver, although they generally aren't willing to finance cars over five years old or those with more than 75,000 miles on them. The older the car, the shorter the term for financing, and many won't finance used cars for longer than 36 months.
Ford Credit Corp., the financial arm of Detroit's Ford Motor Co., is projecting an increase in used-car loans this year over last year.
by CNB