Rainbow Motors of Kingsport owner Randall Gibson said Monday that his business has experienced the trend reported by CNW Marketing Research, which reported a 3 percent spike in used vehicle sales in the United States — the first year-over-year increase in 12 months — due in large part to current economic conditions.
Used car and truck prices are on the rise because of the demand, but they are still on a level where it’s a buyer’s market, Gibson said.
“The trend is to buy something used versus new. I don’t think there is one thing you can point to, but I’m sure the economy is leading the way in that,” Gibson said.
“We buy directly from most of the local (new car) dealerships because we trust them, and I’ve worked with them for years. But from what I am hearing on the car auction route, inventory is hard to come by. Dealers and people from other states are coming in and buying everything.”
One part of the car buying process that Gibson says is bogging down an otherwise booming used market is the ability to get a driver financed into his vehicles.
“I think it is harder to get someone financed for a vehicle right now because it seems like banks are sitting on their money because of the financial situation. But if the banks decide to free up some capital, I think we will see some help coming to consumers, which will have a spin-off, positive effect on the economy,” he said.
A recent breakdown of household expenses from the Bureau of Labor Statistics shows a good percentage of a family’s yearly paycheck goes to vehicle expenses.
A family with a yearly income of just over $63,000 is spending more on auto-related expenditures than clothing, health care and entertainment, the study of 2007 figures showed.
Consumers spent an average of just over $8,700 on all forms of automotive costs, including maintenance and car purchases, during that time period, an increase of almost 3 percent from 2006 data.
Gibson is quick to note that unless new car sales improve, which were down 41 percent in February, the impact on the pre-owned sector will be devastating.
“If people are not trading in the vehicles they’re driving now for a new car or truck, we will see our inventory dwindle down to nothing. The two industries support each other, so we want to see new car sales go up. Otherwise, we’re out of business,” he said.