The plunge in new car sales during peak recession years in causing a slight increase in used car prices now. The reason is simply a matter of supply and demand.
The disappearance of new car leases during the recession contributed to the rising price of used cars. Before the financial crisis, dealers were able to re-sell lease cars as used cars keeping supply high. The same goes for rental cars.
To keep production going, auto makers would produce new cars and sell them to rental companies. Those rental companies would, after a few years, sell the cars to dealers who would re-sell them as used. But now that lease cars are virtually non-existent and manufacturers slowed production, used car supply is down.
Local dealers say it's also a matter of customers playing it safe.
"I think a lot of people are frugal now a days and they're spending less money on vehicles. What they're trying to do is buy less new vehicles and if you don't have as many new vehicles sold you don't have as many trade-ins," Dave Ziegeler, owner of Hometown Motor, told NewsChannel 7.
While the Cash For Clunkers rebates were good for consumers from 2008 to 2012, now auto dealers say it's just one more reason why used cars are in such short supply.
But according to the used car auction organizers, the end is in sight with new car sales expected to increase by more than one million sales this year.
