Local car dealer comments on used car, new car prices

A local auto dealership manager sees some merit to a Friday report from Edmunds.com that some new cars can be purchased cheaper than similar used models.

Edmunds said its research shows that incentives and interest rates on some new cars are so generous they make the new car less expensive than a one-year old version of the same model.

For example, a 2009 BMW 6 Series, two-door convertible sold with an aggressive incentive and interest rate package could be $6,175 less expensive than the 2008 model.

“Compared with new vehicles sales – which are at lows unseen in decades – the used car market is doing well,” Edmunds.com CEO Jeremy Anwyl, noted in a statement. “Desirable used vehicles are becoming harder to find, pushing up their prices, while today’s new cars are heavily discounted. This is creating an unusual economic event: It can actually be less expensive to purchase a new car than a used car.”

The Edmunds research shows that that approximately 18 percent of new car buyers qualify for special finance rates offered by automakers.

David Kupers, general manager at Putnam Lincoln-Mercury in Fort Smith, said the “Edmunds numbers” will differ in geographic regions, with the differences often depending on the supply of new cars.

“In some areas, you will have a shortage of new cars. Then what that does is drive up used car prices,” he explained.

However, Kupers does have a potential example of the new car-used car price difference noted by Edmunds. Putnam Lincoln-Mercury has the Mercury Milan (V6) at a 0% interest rate for 72 months. The monthly payment is less than $400.

“That could be a hard deal to beat” even up against a used car, Kupers said.

Kupers said the dealership uses the Kelley Blue book to base prices for its used cars. Often the Kelley figures will show a slight decline each month for used car prices. That changed about 10 months ago.

“Each week, when we reappraise (prices), it’s not unusual for a truck or SUV to go up $1,000,” Kupers said.

Kupers also stressed he is sensing a change in the environment and in the attitudes of customers and potential customers.

“Right now, the feeling in the car environment has completely changed in the last 60 days. It’s changed for the better,” Kupers said. “People are finally accepting that we have the government we have and we can’t affect that. So we have to just move on and get what we need.”

Kupers also said he is “optimistic that this (Fort Smith regional) economy” will not see the same problems as most other regional economies nationwide.