MINNEAPOLIS (WCCO) — Officials said Wednesday that used car prices are at their highest levels in about 16 years. The reason: Low supply and a growing demand.
People are keeping their cars longer, with the average now more than 10 years. The recession is one reason. Another is cars are built to last longer. But now some people are forced into looking for another vehicle.
“We’re seeing people that, you know, three to four years ago would have traded a car in with a thousand dollar repair just to not deal with the repair,” said Jay Peterson, manager of Miller Chevrolet in Rogers, Minn.
When people keep their cars longer, there are fewer trade-ins at dealerships. That means fewer used cars for sale on the lots. Dealers are paying an average of nearly $12,000 for each car purchased at auction. That, too, translates into higher prices for the consumer.
“Yeah, they’re over priced,” said a car shopper surveying a used car lot. “A lot of lots we’ve been to — you know — some of them will negotiate with you — some of them won’t.”
Some dealers are concerned about a bubble in the used car business. Most have purchased used vehicles at higher than historic prices and if the shortage ends they’ll be taking a loss on current inventory.
NewsRadio 830 WCCO’s Bruce Hagevik Reports