Why are used cars so expensive?

Late-model used cars are in short supply, jacking up the price. Some cars, like the?Mazda CX-9 Touring SUV,?are cheaper new than used.

The scrap of paper went back and forth across a faux-wood desk, accumulating numbers. The customer poked his calculator, wrote a figure, and passed it over. The car dealer, both thumbs flying over his own oversized calculator, came up with his sum, wrote it down, and passed it back.

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In the end, dealer and customer were still $1,000 apart on a used 2010 Subaru Outback parked just outside the door. "I can't meet your price," said the general manager of the Boston-area Subaru dealership. The customer was stunned. The dealer was willing to part with a new 2012 Outback for only $1,700 more than the old one ($1,100 more figuring in cheaper financing and insurance costs). Yes, the 2012 was a demo car so it came with a discount, but it had far fewer miles and was loaded with options. It was a surprising introduction to today's topsy-turvy world of auto economics: For consumers looking for a slightly used vehicle, it's often better to buy new.

"We're seeing extremely high levels of pricing pretty much across the board" for used cars, says Jessica Caldwell, senior analyst at Edmunds.com, an online automotive information company based in Santa Monica, Calif. "A lot of the time, if you're going to buy a late-model used car, it doesn't make financial sense."

Blame the Great Recession. The recent dearth of new car sales (especially in 2009 and 2010), a pullback from leasing, and increased demand for used cars has created the tightest used car market in at least 12 years. Back then, the narrow gap between new and used lasted nine months. Now, it could last a lot longer.

"Maybe you would see some kind of break in the used car prices in a couple years for late models," says Bruce Belzowski, a researcher at the University of Michigan Transportation Research Institute in Ann Arbor. But that assumes the economy continues to mend and new car sales approach normal levels. In 2006, Americans bought 16.5 million new cars and light trucks. In 2012, Edmunds estimates they'll purchase 13.6 million.

Used car prices are so high that new cars are sometimes cheaper.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/_bz63_zHeZI/Why-are-used-cars-so-expensive

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