Used car lots nationwide are facing a shortage of cars built during the Great Recession years of 2009 and 2010, when the car industry was in a slump. As a result, buyers looking for an economical used car are finding mostly much newer cars that may be outside their price range.
Jerry Reynolds, “The Car Pro,” says it’s the old tradeoff between supply and demand. “Last year we sold over 17 and a half million [new cars], but if you go back to 2009, that number was right about 10 million,” Reynolds says. “So that had a drastic effect on the supply of used cars coming in on trades.”
Later model used cars and lease cars coming in off lease are available, but they aren’t cheap. “There’s a gap between $10,000 and down cars, and $15,000 and up cars,” Reynolds observes. “And all the dealers are having to deal with that.”
It’s a nationwide problem, and it’s affecting us locally as well. “Texas, and Houston in particular, does a lot of used-car business,” Reynolds notes. “The numbers nationally, and they’ll hold true with Houston too, are about 4 to 1 used to new.”
Another factor that further reduced the number of older cars available was the Cash for Clunkers program in 2009. “All those cars were taken in as trade-ins,” Reynolds points out, “but none of them went back onto the market. They were all destroyed. You’re talking about almost three-quarters of a million used cars.”
All these factors mean the good cheap used car is an endangered species. “That $5000 used car from 5 or 6 years ago, that same car today is a $7500 to $10,000 car, depending on the mileage,” Reynolds says. If it’s a Honda or a Toyota, you can add about 20%, and if you’re looking for a used SUV under $10,000, Reynolds says, you can forget it.
Cheap cars can still be had, Reynolds says, but you get what you pay for. “You can find some 200,000-mile cars that have had serious body damage in the past, or bad wrecks, or been in one of the Houston floods, or something along those lines, for $3500,” he says. “But it’s not going to last you very long.”
Catch the Car Pro Show with Jerry Reynolds, every Saturday on KTRH at 11 am.