Auto Outlook: New or Used?

By AL SWANSON, United Press International  |  June 3, 2012 at 5:30 AM
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If you're in the market for a car or truck it might make more sense to consider a new vehicle this year rather than a used one.

New vehicle prices are higher than they've ever been, but so are used car prices. With a new vehicle it's more likely you'll get several years of relatively trouble-free motoring.

Of course, there are no guarantees.

I had a brand new Audi that sputtered to a stop in traffic with 1,561 miles on the odometer. The car was towed back to the dealership where the service manager told me it was being recalled because of a faulty fuel pump.

"Even Germans can have a bad day," he joked.

While used cars have already finished their break-in periods their mechanical parts eventually wear out.

That's why it may seem counter-intuitive that used car prices have soared, but it's simply a matter of supply and demand.

After three years of depressed new car sales, there are fewer used cars to be had. CNW Marketing Research estimated car shoppers bought more than 19 million fewer cars in the late 2000s than they did before the recession hit in late 2007.

Add to that the number of older vehicles -- an estimated 3 million -- junked between 2000 and 2007. And how can one forget the Transportation Department's "Cash for Clunkers" rebate program that scrapped more than 690,000 vehicles during the summer of 2009 to stimulate sales of more fuel-efficient vehicles.

The biggest beneficiaries of "Cash for Clunkers" vouchers were Toyota, General Motors, Ford, Honda and Nissan and many U.S. buyers took their first serious look at South Korea's Hyundai and Kia.

Kelly Blue Book senior marketing analyst Alec Guiterrez told The Detroit News used car prices are 15 percent to 17 percent higher than in 2009 but may begin to decline gradually early next year.

Before the recession, R.L. Polk estimated there were 241 million vehicles on U.S. roads -- 89 for every 100 Americans. That figure fell to about 77 cars for every 100 Americans by 2011.

Polk and census data indicate 48 million cars were bought in the United States from 2008 to 2011 while some 47 million were scrapped. Vehicle leasing also collapsed with the credit market. Fewer "pre-owned" cars meant higher used car prices and although new car sales have picked up the trend could continue. said list prices of five popular used vehicles five years old or newer are up 29 percent from April 2009 -- rising higher than price hikes for new vehicles.


Plugging in

The U.S. Capitol may someday offer charging stations for electric vehicles.

Sen. Carl Levin, D-Mich., last month won approval of a bill that would permit electric vehicle charging stations at the Capitol. A similar bill would need to pass in the House.

"We're having a fight with the Architect of the Capitol because we want them to put electric charging stations in the garages -- not for me -- and then (users) will have to pay for it," Levin told The Detroit News last year. "We need them in the garages."

Levin drives his 2011 Chevrolet Volt plug-in hybrid from his Washington home to the Capitol. The News said Levin does not have a garage and hopes one day to be able to recharge the Volt while at work.

The Volt can go about 35 miles on batteries and run 250 miles more on electricity generated by its gasoline engine when the batteries are low.

Republican Sen. Lamar Alexander of Tennessee owns an all-electric Nissan Leaf, which has a range of 73 miles per charge, the newspaper said.

The Leaf can take as long as 20 hours to recharge using a 120-volt electrical outlet but only needs about eight hours to recharge at a 240-volt outlet. A Volt would need about five hours to recharge depleted batteries at a 240-volt outlet.


Fuel-efficient vehicles

Prices for fuel-efficient used vehicles are falling along with gasoline pump prices. Gas averaged about $3.62 a gallon nationwide last week, down from nearly $4 a gallon in April.

As gas gets cheaper, sales of pickups, minivans, SUVs and light trucks are picking up and sales of electric vehicles and plug-in hybrids are stagnating, the National Automobile Dealers Association said. That means dealers are more willing to deal to sell used fuel-efficient vehicles.

"Rapid depreciation for hybrid vehicles is not uncommon after surging gasoline prices reach a peak and then begin to quickly fall," Jonathan Banks, senior analyst with the NADA Used Car Guide, told The Detroit News. "During periods of rapidly changing gasoline prices, values of hybrid vehicles become more volatile because consumer demand for hybrids rises and falls along with the price of gasoline."

As an example, the NADA Used Car Guide estimates that after increasing in value by $2,350 in the first half of 2012, the price of a 2011 Toyota Prius five-door Liftback will fall $900 in June.


Chrysler News

Chrysler's Town & County minivan is heading for the auto graveyard.

Automobile Magazine says the company that invented the minivan back in 1983 plans to end production of the Town & Country, leaving the Dodge Grand Caravan as Chrysler's only minivan.

The Jeep Compass also is being phased out.

The big Town & County will likely be replaced by a new Chrysler crossover utility vehicle.

Fiat, Chrysler's parent, last month agreed to a non-binding memorandum of understanding to partner with Japanese automaker Mazda on two rear-wheel-drive convertibles.

The Detroit News said both roadsters would be based on Mazda Motor's MX-5 platform, one becoming a new Miata and the other an Alfa Romero Spider.

"It is especially exciting to be collaborating with such a prestigious marquee as Alfa Romero," said Mazda Chairman and Chief Executive Officer Takashi Yamanouchi in a statement.

Fiat has not expressed an interest in buying a stake in Mazda, Automotive News said, but Chief Executive Officer Sergio Marchionne recently said Chrysler was "totally open" to other bilateral arrangements.

"The economics make it very difficult for most automakers to continue to produce all their own platforms and powertrains," Marchionne said at a Chrysler plant in Belvidere, Ill., where the new Fiat-derived 2013 Dodge Dart is assembled.

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