Phoenix, AZ (PRWEB) July 17, 2010
Sales consultants on the Team Centennial staff report they have been informed by reliable auto industry sources that used car values are expected to remain firm in the near future, posing a challenge to dealers looking for wholesale bargains to stock their lots.
Centennial General Manager of Inventory, Shea Petta has cited a report by Ricky Beggs, managing editor of Black Book, during a recent marketing conference to the effect that the huge drop in new car sales over the last two years – about six million unites each year – has drained the supply of used cars considerably. If half of those lost new-car sales would have involved trades that means the current wholesale market is short about six million used cars than what it might have been, Beggs is reported as saying. “During the next two years at least, maybe even three years, we’re still going to see a shortage in the marketplace,” he added.
Centennial’s Petta has also quoted N.A.D.A. Used Car Guide’s Jonathan Banks who recently said that used retail prices have not grown at the same rate as used-car wholesale prices. He added the fact that the dealer margins are still better with used-car sales, but they are “shrinking.”
Auto leasing and sales in the Phoenix market are expected to be impacted by these shrinking margins, said Centennial’s used car team leader and this has been attributed to two factors: First, retail consumer financing is still tight, and the other (factor) is consumer confidence is still not there. The Phoenix According the Phoenix car and truck leasing official added that because cars were severely undervalued a year ago, as the economy stopped bleeding and started to turn, the values improved.
Rene Abdalah, vice president of RVI Group, said one positive effect of the downturn was that it forced auto manufacturers to reduce capacity and strengthened transaction prices.
“No one really talks about new-car prices,” Abdalah said. “Compared to a year ago, they are up 5 percent. That’s for the first time in the history of new-car pricing. As we go forward, sales are expected to go up.”
Historically, to keep sales up, manufacturers have relied on incentives and cutting prices, but it is unclear what will happen in this new era, he said.
Abdalah added that with the unemployment figures remaining high, used-car prices will stay firm.
Team Centennial expects dealers to keep smaller inventories and use more resources, such as online sales, to find the inventory to match their customers’ needs. Banks agreed that dealers have to focus on individual consumers in stocking their lots. A dealer may be willing to pay more in the lanes for a specific car simply because it meets a customer’s need. But this will create more volatility in the market, he said.
Centennial General Manager Mike Hughes agrees with Banks that demand for used cars will be better throughout 2010 than last year. However, different automotive segments are not equal, he said, a viewpoint he shares with Eric Ibara, director of residual value consulting for Kelley Blue Book.
“Due to the new interests in subcompacts, hybrids and fuel-efficient vehicles,” Ibara said, “my expectation is that competition in those segments will be intense in the coming years and I don’t expect strength in pricing in those segments.”
Located at 48 N. 56th St. in Arizona’s capitol city, Team Centennial’s large indoor showroom and extensive online inventory are convenient sources of one-stop shopping for car and truck customers in central Arizona. For Phoenix automobile sales, they can be reached at http://www.teamcentennial.com.
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