Presidents Day sales saw buyers back on lots, writes JOHN REEDin Detroit
LAST WEEKEND, car salesmen around the US donned Abraham Lincoln wigs and beards in a bid to tempt reluctant buyers into dealerships for Presidents Day sales.
The weekend traditionally kicks off the industry’s spring buying season, and General Motors, Honda and Toyota were among the carmakers offering aggressive sales and marketing promotions.
As they did, producers and dealers were seizing on a rare positive indicator: the used car market is reviving. Prices and volumes for used vehicles have been rising in the US and major western European markets since the end of last year.
“The used car market has come roaring back,” Jim Farley, Ford’s US head of marketing, said last week. “That shows there is some credit availability.”
The trend, if it continues, would be welcomed by both carmakers suffering massive drops in demand and financially endangered dealer groups. Many of the latter have been selling new vehicles at little or no profit, but can earn better margins on used ones.
“It’s a glimmer of hope for the industry,” says Jesse Toprak, senior analyst with Edmunds.com, the US car buying website.
After suffering their largest monthly decline ever in October, average wholesale prices for used vehicles in the US, the world’s largest car market, rose in November and December and were up another 3 per cent month-on-month in January, according to Adesa, one of America’s biggest vehicle auction houses.
In Britain, where the value of the average used car fell by 20 per cent last year, wholesale prices have climbed about 5 per cent this year, according to Glass’s Guide, which follows used-car valuations.
“Immediately after Christmas, consumers started appearing in significant numbers,” Adrian Rushmore, Glass’s Guide’s managing editor, said.
“Retail demand for used cars picked up and has continued since.”
The pick-up in used cars reflects, in part, the grim realities confronting one of the world’s largest industries.
Globally, many plants were shut in December and January, curtailing the supply of new cars and shrinking dealers’ inventories.
Some of the spike in demand reflects recession-squeezed consumers trading down to used cars from new ones.
Used car prices are down year-on-year.
– Financial Times