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SDNews.com
Home La Jolla Village News

Showrooms disappear as used cars take spotlight

Tech by Tech
July 25, 2009
in La Jolla Village News, Top Stories
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Showrooms disappear as used cars take spotlight

Since buyers are shunning showrooms for the lots, the world of pre-owned automobile searches becomes more than just a kick of a few tires.  Glitzy showrooms are disappearing anyway as General Motors and Chrysler eliminate 2,000 dealerships. Ready, set and prepare for the hassle-free, no-obligation pitches. Before you reach for the keys, listen to: Unbelievable prices. Close to new… low mileage. No credit? No problem. Fast approval. Complete service provided. Or the cliché, “A little old lady owned it and only drove to the store.” High-quality used cars may be a coveted and rare commodity, as the auto industries attempt to meet federal government commitments.  According to Auto Data Corp., sales of certified pre-owned cars in January 2009 were up 10 percent from the previous year. But used car prices are up 5 to 15 percent since Jan. 1. People who bought used cars last August can usually resell them — provided the tires are good — for 10 to 30 percent more than they originally paid, and they will have had six months’ driving free. In almost every deal, rubber is the key price factor. Used cars with extra-good tires bring $50 to $100 extra; cars with worn ones may not be wanted at all. Quipped a Detroit Ford dealer: “You would think this salesroom was a mosque to see all those guys down on their hands and knees looking at tires.” As a general rule, the average consumer would trade in a car after two to three years, thus providing a steady supply of low-mileage used cars. Under current household budget and credit restraints, drivers might be hanging onto their cars longer and returning them when they’re nearing the junk age. Overall, the most reliable vehicles come from Asian nameplates, according to Consumer Reports data. Though domestic cars are getting better, they still trail the Japanese models. European models are also improving, but the older ones tend to be among the most problematic. Buying a reliable three-year-old model could be a good investment since the steepest part of the depreciation curve is past. ConsumerReports.org respondents reveal that problem rates for cars have decreased across the board, so newer used cars should hold up better than their predecessors as they age. Among 5-year-old and newer cars, Ford, Hyundai and Nissan are about tied in reliability. European cars, long the least reliable overall, are pulling even with the domestics on newer models. The Federal Trade Commission has good guidelines for selecting a used car. Also check with the San Diego consumer protection agency or the Better Business Bureau if there might be an unresolved customer complaint against a dealer. By law, used car dealers are not required to give customers a right to cancel a purchase within three days of buying. It’s best to understand the policy before buying. Surprisingly, it is the more expensive vehicles that used car shoppers seem to be considering, if Web statistics are anything to go by. Perhaps consumers are accustomed to a certain level of luxury and don’t want to buy a cheap car. *** After numerous meetings between the National Automobile Dealers Association (NADA) and the Obama administration concerning greater access to floorplan loans, the Small Business Administration (SBA) is launching a program to provide eligible dealers with government-backed lines of credit to finance vehicle inventory. NADA praised the SBA for its efforts to expand its loan guarantee program to include wholesale inventory, also known as floorplan loans. Many auto dealers are struggling to survive without access to credit to purchase vehicles for their lots. The pilot program began July 1 and runs through Sept. 30, 2010.

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