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Used-Car Dealers Feel Effects of Automakers' Zero Percent Financing Incentives

December 6, 2001

Hot new-car sales have brought in a wave of trade-in vehicles during the past two months. That, combined with rental car companies shrinking their fleets and a flood of vehicles returning from lease, has glutted the market, according to the Indianapolis Star.

It's a great time to buy a used car right now. Low bids at auction also mean falling sticker prices. The average asking price for a used car has dropped $500 to $600 since the summer, according to Art Spinella, vice president and general manager of CNW Marketing/Research in Bandon, Ore.

The average price paid is now 90 percent to 91 percent of dealers' asking prices, down from the usual level of 95 percent.

Many dealers brokered strong November used-car sales via incentives or instructing sales staffs to take deals more readily. Some industry analysts say dealers must continue such a strategy to keep sales up in 2002.

National Automobile Dealers Association (NADA) Chief Economist Paul Taylor points to shaky economic signs -- such as continuing layoffs -- that might stifle all car sales until next fall. Dealers "have to turn inventory more quickly," Taylor said. That means -- you guess it -- cutting deals.

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