Used Car Sales Tumble, Too
CNW Research’s of Brandon, Ore, is in the business of tracking “consumer confidence, new-used floor traffic, manufacturer and dealer incentives, and used vehicle sales by channel.” In their daily work, they stumbled across a disturbing trend. As every grizzled veteran of this industry remembers, when the economy is down, used cars do well, because folks can’t afford new ones. People hold on to their ride much longer, which lowers the supply of used cars. Fewer new car sales mean fewer trade-ins, which lowers the supply of used cars. Or so the wisdom of the grizzled veteran goes. This time, it’s different. Sales of used cars fell 20.7 percent in November, compared with the period a year earlier. That’s still benign compared to the 37 percent hit the new cars took. But it disturbs the veterans nonetheless.
CNW expects 2008 to come in 36.6m units sold, down 11.5 percent from 2007. That would mark the lowest levels since the 1982 recession. Whoa: November new car sales also were the lowest since 1982. Are people tired of cars, whether old or new? Have we just been catapulted back to the bad early Reagan years?
The New York Times ventures a guess: “The most prominent reason for the declines, auto market analysts said, is fear of the future.” People are not buying because of the fear of the unknown?
CNW Research has a more plausible explanation: Lack of desire, paired with a lack of dough. CNW says, used-car dealers have seen about half as much traffic in their showrooms this year. Customers that come on the lot are finding it harder to get loans because dealers are asking for more money down and demanding higher credit scores from people taking out loans.
Some friendly neighborhood used car lots resort to even more invasive tactics: ankle bracelets for cars. “To ensure that monthly payments are made, the vehicles, which are typically from three to eight years old, are often equipped with GPS devices that let the dealer disable the car’s starter if the buyer falls behind on payments,” writes the New York Times in utter amazement, having just been introduced to the netherworld of BHPH. Some gizmos will even talk to the owner who falls behind payment. Cars with on-board collection agents.
Of course, this creates a market for counter-measures. At least one market that’s up.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
More by Bertel Schmitt
Comments
Join the conversation
I agree. In fact if I could turn back the clock and simply deal with cash customers (or those who can get superprime financing) I would gladly do it. I enjoyed selling six to ten year old cars that didn't require carrots, sticks, and other trappings that are designed to contain human stupidity. Cash customers, whether they pay $500 or $25000, are almost always far more intelligent and interesting than the 'buy here / pay here what's a dipstick for?' group. Hippo, no offense taken. Your observations are just the reflection of what I'm seeing these days. Thank God I still work as an auctioneer.
I'm curious - does CNW Research only look at retail sales? As someone who has four vehicles and two teenage drivers, with the third about a year away, I tend to find used cars on CraigsList. I also have sold my last several vehicles using this, as well as my hobby vehicles, old motorcycles that I buy, restore and sell (except for some that I believe are good long term investments).