1992 Plymouth Laser RS-T AWD

Shortage of Used Vehicles Traces Back to the Collapse of Lehman Brothers

Beginning this week, there will be a major shortage of late model used cars according to a report in Automotive News (subscription only). The cause of the shortage is rooted in the economic crash that occurred with the collapse of Lehman Brothers three years ago. Sales of new cars, an important economic factor, were effected by the collapse of the investment house.

The shortage of used cars is expected to worsen over the next three years because owners are purchasing their lease vehicles outright at the end of their three-years leases.

Purchasing a certified pre-owned vehicle has traditionally been a smart money buy, allowing owners to move up into a pricier, more highly-contented vehicle for what they would have paid for a less costly new vehicle. Used-vehicle prices are going up dramatically and there are fewer of them. Used car prices are approaching the cost of a new vehicle.

The situation is expected to stay the same for the next three years as new car sales have been lower than the norm over the last three years and owners are expected to continue to hold onto their vehicles at the end of lease because the purchase price is substantially lower than the purchase of a new car.

This presents an inventory problem for dealers who are not selling new cars at the rate they have been and are not getting back lease cars to sell. Manufacturers have their own pre-owned programs that are, in effect, competing with the dealers programs. Manufacturers have in the past subsidized low-cost lease deals in order to increase their overall sales volume.

The used vehicle supplies are expected to fall this year and for the next two years and won’t return to 2008 levels until 2017, according to the National Automotive Dealers Association. Dealers are now selling older vehicles with higher mileage. Prices for used vehicles can be found at http://www.nadaguides.com.

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