"We don’t want them walking out the door without a car."
Falling home prices and the collapse of the stock market, as well as tight credit conditions and job insecurity related to the recession, have caused new-car sales to plummet over the last several months. New vehicle sales in the U.S. were down 37% in January compared with a year ago, forcing automakers to slash production and driving hundreds of dealers out of business.
"It is safe to assume that many shoppers who normally would be tempted by 'new car smell' and the latest automotive technology made a more cost-conscious decision because of economic pressures," said David Tompkins, Edmunds.com senior analyst.
Online shopping site Cars.com is seeing the same trend. Consumer contacts with dealers for used cars are up 6% compared with a year ago, the site reported this week.
Luxury cars such as Mercedes and Lexus in particular are showing strength, Cannon said, as are big pickup trucks — which dealers couldn't give away last summer when gas prices skyrocketed. As a result, prices for some used-vehicle segments are actually beginning to creep up, according to Kelley Blue Book, which tracks used-car values.
Wholesale values of pickups and SUVs rose more than 4% in January, KBB reports, although that wasn't driven totally by supply and demand. Prices for these vehicles had fallen so much that a sharp rebound was almost inevitable once gas prices retreated.
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