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Booming New-Vehicle Sales Creating Glut of Trade-Ins

November 14, 2001

As interest rates as low as zero percent spur a surge in new-car sales, used-car lots in some areas of the country are filling up fast. New

cars sold at record levels in October as shoppers rushed to take advantage of special financing offers from the Big Three -- Ford,

General Motors and Chrysler -- and a few other automakers. Many of those buyers had trade-ins, adding their vehicles to cars coming off lease and those of rental-car companies thinning their fleets -- and creating a glut of used cars.

In Arkansas, dealers affiliated with automakers are seeing a mixed bag, according to the Arkansas Democrat Gazette. Arkansas Automobile Dealers Association President Dennis

Jungmeyer said he has talked to some dealers who say they aren't overstocked. "And then I've talked to others that because of the interest rate incentives" have large stocks of used cars, he said.

The national glut is real, Jungmeyer said, and one automobile industry analyst said he believes it will last awhile. "You're seeing the tip of the iceberg," said Jason Altman, an economist with the National Automobile Dealers

Association (NADA).

Three consecutive record years for new-vehicle sales have already built a large inventory of used cars and trucks through trade-ins. Auto leases were responsible for a large percentage of those sales and, given that the typical lease lasts 36-42 months, Altman said he expects a larger-than-usual stream of used cars for the next couple of years.

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