Auction prices up but retail demand not there yet

As more time passes we see more and more of the effects of the expected decline in new car inventories. At auctions, prices for used vehicles rise as more dealers attempt to prepare for a shortage of new vehicles in the market. The anticipated shortage is of course a result of the devastating earthquake and tsunami that hit Japan in March, that has had a major effect on vehicle production. So far, retail demand for all the used vehicles that have been purchased at the auctions, hasn’t caught up. The dealerships anticipate demand months out while consumers won’t see this as an issue for a few months to come. This combo may have used vehicle auction prices dropping and causing a used car bubble. Although there is fear and anticipation of a used-car bubble, wholesale used vehicle price continues to rise. For the month of June, NADA Used Car Guide raised its suggested price of small vehicles by about 10% from May prices.

To read full article on Automotive News, please click here.

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