Tuesday, November 3, 2009

Dealers say used-car stocks are dwindling

HOUMA — As sales of new cars remain low, local used-car dealers say they're having trouble keeping up their inventories. Fewer new-car sales means fewer of the used trade-ins they sell to their customers, they say.

Independent dealers say the prices they pay for used cars are rising. And customers are facing diminishing selection and higher sticker prices.

When sales of new cars were up, the dealers say, new-car dealerships had stock they were willing to sell at a price the used-car lots could afford. Now the new-car dealers are holding on to more of the trade-ins they receive because their sales volume is down.

In Terrebonne Parish, tax records show new-car sales were down by 26 percent in September when compared with the same month in 2008. Lafourche does not break down sales tax by type.

Melissa Wyman, owner of Melissa's Auto Sales on East Main Street in Houma, was among dealers interviewed Monday who said there's plenty of evidence to demonstrate the trend. Increasingly harder to find, she and other dealers said, are the low-mileage, well-kept vehicles customers want.

“We used to be able to buy them. There were a lot of them out there to go get,” she said, referring to used cars meeting the grade she is comfortable offering to her customers. “I've been in business 20 years and never seen it like this.”

Wyman has had as many as 35 vehicles for sale on her lot at one time. Right now she's down to eight.

Kevin Rembert, a former Houma auto dealer now operating in Slidell, serves on the Louisiana Independent Automobile Dealers Association's board of directors. Rembert said there are several ways consumers will be impacted by the shortage.

“There will be a smaller selection for you to pick from,” he said. “You may not get exactly what you want sometimes and you may end up having to pay a little more for them.”

Rembert described the issue as “a little bit of a shortage” largely caused by people not trading in as many cars.

“Consequently there are less new cars on the market. New car sales are down, so since they are selling less new cars they are trading less … It's a snowball effect,” Rembert said.

Cars are also lasting longer, Rembert said, and people are holding onto them longer.

At N&N Auto Sales on West Main Street, salesman Ryan Arceneaux said the shortage has made for lean times.

“We're getting them, but it's few and far between,” he said of the inventory that helps him make a living.

The federal government's “Cash-for-Clunkers” program made a dent in the market too, some dealers said. Cars that were traded in under the program can't legally be resold. And one person's “clunker” could be another's dream car or truck. Arceneaux said big Ford pickups, for example, are all the rage among buyers locally and he's having trouble keeping them in stock.

New car dealers who also have used cars on their lots reported fewer difficulties than those whose stock is entirely used.

Used dealers did express hope that the shortage will be temporary, and improve as the economy recovers.

“I think after the first of the year it might get a little bit better,” Melissa Wyman said.

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