Used Car News

The first half of the year ended poorly and the recovery now appears somewhat shaky.

The economy will continue improving, said Manheim economist Tom Webb, but it will be a “slow slog.”
June saw consumers’ moods sour, the manufacturing revival slow and the unemployment rolls increase. 
The worst news for the used-car industry was the downward revision in first-quarter GDP to 2.7 percent.
New-car sales need 4 percent growth to regain a normal rate and it takes 5 percent GDP growth for full employment, Webb said.
June’s new-car SAAR came in at 11.1 million, down 10 percent May, according to Edmunds.com.
“We talk a lot about recovery, but it doesn’t seem headed in that direction,” said Edmunds.com senior industry analyst Jessica Caldwell.
Retail sales were especially low in June, Caldwell said.
The manufacturers are making up for slack consumer demand by taking advantage of increase fleet sales.
Many rental car companies were unable to obtain financing for vehicles last year during the height of the credit crunch. Now they have the money and are spending it.
For example, Dollar Thrifty Automotive Group Inc. recently sold $300 million worth of asset-backed notes and has added $500 million of vehicle financing this year.
George Hoffer, an economic professor at Virginia Commonwealth University, said all the cars he rented on a recent trip showed barely any mileage.
Fleets can only buy so many vehicles, Caldwell said. Manufacturers need to start offering incentives again at some point.
“They can’t ignore this low consumer demand,” she said.
Last year, the government provided the incentive program through the Cash for Clunkers program.
Consumers seem unlikely to spend without help.
Many have seen their retirement and college tuitions savings devastated by stock market loses. Others are paying on a mortgage worth less than their home’s value.
“They’re a little more spent out than pent up,” said Tom Kontos, ADESA’s executive vice president of industry analysis.
Kontos expects businesses to lead they way out of this recession rather than consumers.
Hoffer said he saw a recent report placing equal odds on a sharp recovery and a double-dip recession. He puts the chances of sliding backward higher than that report.
“What good news is out there?” Hoffer said.