An improving economy, a shortage of vehicles and higher new-car prices have contributed to an upswing in used-car prices, according to a report in Used Car News. Used-car dealers are getting a healthy 92 to 93 percent of the asking price for their retail deals. Auctions are reporting sales rates of more than 80 percent, the report says. The ADESA Auction Inventory Index fell below 100 for the first time since last August, said Tom Kontos, ADESA’s vice president of industry analysis, in the Used Car News story. The index stood at 96.3 at the end of February, down from 147.3 at the end of December and down 5.9 percent from its year-ago level of 102.4. Increased employment is a major factor in the upswing. Over the past year and a half, employment has grown by 3 million, Tom Webb, Manheim’s chief economist, said in the report. More importantly for the used-car market, February’s initial jobless claims have fallen to 307,000 based on a four-week moving average. Lower jobless claims reduce loan deficiencies, which in turn increases credit availability and spurs sales. Just as important, consumer confidence about current economic conditions, including the labor market, continues to gather momentum. The biggest wild card for the continued strength of used-car sales is gas prices, which have jumped dramatically in recent weeks. This is in contrast to lackluster new-car sales. For January and February, new-vehicle sales were down 3.6 percent compared with 2004. Experts have blamed everything from cold weather and rising gas prices to a blow-out selling month in December for the lackluster performance, according to a Detroit Free Press report. March new-vehicle sales figures, to be released on Friday, are likely rebound somewhat.
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