| Are Car Buyers Getting Used To Higher Prices? Auto companies and dealers are succeeding in an area where other industries have failed: convincing U. Used car prices also are rising. This better pricing environment could persist. Other industries can only look on with envy. S. drive earnings-and wish forlornly that their European operations were in just as good shape. Nielsen scanner data compiled by Morgan Stanley suggests food companies still struggle to raise prices without volume getting hit. Curiously, higher prices do not appear to be weighing on sales. A dearth of used inventory-the lagging response to the sharp fall in new-vehicle sales that began during the 2008 financial crisis-has led to a drop in the quality of used cars and trucks on the market. As for used cars, publicly held dealerships including AutoNation, Group 1 Automotive and Penske Automotive Group have lately reported that first-quarter sales were well above year-earlier levels. 2% more in March than a year earlier. Pent-up demand is one thing working in the car industry's favor. A virtuous cycle also is developing: Higher used-car prices make new cars more attractive, while smaller incentives will slow the pace of depreciation on new cars, pushing resale values higher. 4 million new light vehicles and trucks were sold in April, up 10% year-on-year. That may understate what's actually happened. The upshot? Dealers ought to be able to operate more profitably. vehicle inventories, giving dealers more pricing power. In April, the average new light vehicle fetched $30,303, according to research firm TrueCar. Higher prices and lower incentives came despite two countervailing forces. Second, April last year was when the supply-chain shock from Japan's tsunami began cutting into U. |
Friday, 4 May 2012
Are Car Buyers Getting Used To Higher Prices?
