Used Cars See Seller's Market

MINNEAPOLIS (WCCO) -- We've all heard the term "seller's market" when it comes to home sales, but the same seems to be true lately for used car sales.

Supply is down, demand is up, and that's driving up the value for people who want to sell. According to AutoNation, the average selling price for a used car is up more than 5 percent.

Elissa Cedarleaf-Dahl is looking to buy a car, and she says, in this point in her search, she is looking at both new and used cars.

"Whatever has good gas mileage and we can afford," Cedarleaf-Dahl said.

They're shopping where they know they can buy a car, but dealerships are also becoming a first stop for vehicle owners who want to sell.

"We'd consider it, if it was a good plan for us," Cedarleaf-Dahl said.

"It's a good time to be in the market with our buyers program," said Jerry Heinecke, who is the director of whole sale and acquisition at Morrie's Cadillac.

The supply of used cars is down. Drivers are looking for fuel efficiency and holding onto vehicles longer. So dealerships, both big and small, are doing what they can to keep inventory up.

Morrie's is even advertising that it is a dealership that buys cars.

"We get a few people a week that come in with an extra car they want to sell," Heinecke said.

Joe Lindeman, who works at BTB Auto, said, "We're always looking for cars."
Depending on the make and model of the car, the low demand could mean a bigger profit for the seller.

"Economical cars have been increasing more than big trucks and SUVs," Heinecke said.

At the same time, those in the market to buy may find themselves paying more.

"What you used to be able to buy for $1,000, you now pay $2,000 or $2,500. You then have to increase to make a profit," Lindeman said.

The possibility makes the idea of selling a little more appealing to the Cedarleaf-Dahl family, though timing is the driving force. The family just welcomed a new baby into their home.

Heinecke said used vehicles may seem more expensive because in 2008, prices were at some of their lowest points. The market is now beginning to even itself out. He also said even with the reduced supply of used cars, Morrie's Cadillac has seen a 30 percent increase in business, which shows people are once again spending money on cars.

Experts said the values on used cars will probably begin to decrease as fall and winter approach.