Used cars in high demand, command premium prices

Used vehicles prices jumped an average of 16 percent in October compared with a year ago, according to Edmunds.com, an automotive information Web site.

Leading the rise are minivans such as Sharp's, up 27.1 percent. The Web site shows increases for 14 of 15 vehicle categories, with the only decline being a 1.6 percent drop in the price of mid-sized cars.

The dramatic increase stems from basic economic principals, said Joe Spina, analyst for the California-based Edmunds.com. "Used car supply is down, and demand is up," he said.

The supply has diminished for several reasons, Spina said. One is because many vehicle manufacturers cut their leasing programs several years ago, meaning there are fewer vehicles coming off lease and entering the used market.

Another reason is the federal "Cash for Clunkers" program, which gave consumers an incentive of up to $4,500 to trade in older vehicles for new ones. Those older vehicles were destroyed, meaning nearly 700,000 vehicles that could have ended up in the used car market were eliminated.

And finally, new car sales are down — especially after the clunkers program ended in August, so fewer customers are trading in their used cars.

Meanwhile, demand is up because many traditional new car shoppers are now considering used because of the economy, Spina said.

CNSNews.com Clunker Pickups Traded for New Pickups

he most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

The single most common swap - which occurred more than 8,200 times - involved Ford 150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford 150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

Owners of thousands more large old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only barely improved mileage in the middle teens, according to AP's analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state. Those deals helped the Ford 150 and Chevy Silverado - along with Ford's Escape midsize SUV - climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-for-truck and truck-for-SUV deals totaled at least $911 million.

The new data, obtained by the AP under the Freedom of Information Act, include details of 677,081 clunker trade-ins processed by the government through Oct. 16. More than 95,000 of the new vehicles purchased under the program - or about one in seven - got less than 20 mpg, according to the data.

Government Will End Clunker Program Early

"The government will end its popular “cash for clunkers” program on Monday, more than two months early, because it is already running out of money."

"The program, formally known as the Car Allowance Rebate System, or CARS, gives consumers a credit of up to $4,500 toward the price of a new car or truck if they turn in an older vehicle with lower gas mileage. It has generated more than 457,000 sales since July 24, prompting G.M., the Ford Motor Company and other automakers to increase factory output and call back some idled workers."

“It has been successful beyond anybody’s imagination,” President Obama said on Thursday in a radio interview with the syndicated talk show host Michael Smerconish. “And we’re now slightly victims of success because the thing happened so quick, there was so much more demand than anybody expected, that dealers were overwhelmed with applications.”

"As of Thursday, the Transportation Department had repaid dealers just $145 million, or 7 percent of the $1.9 billion that they had requested, leaving many squeezed and prompting some to withdraw from the program early. The government is tripling the size of the work force assigned to handle the applications."

"In many cases, the administration says incomplete forms or errors in the information submitted by dealers are slowing the process. Workers have reviewed about 40 percent of the applications filed, and many have been rejected and then returned to the dealer for possible resubmission."

Auto Dealers Paid for Just 2 Percent of 'Clunkers' Claims, Congressman Says

"The federal government has only reimbursed auto dealers for 2 percent of the claims they've submitted through the popular "cash for clunkers" program, a Pennsylvania congressman said, calling on the Obama administration to help speed up the process. "

"Rep. Joe Sestak, D-Pa., called for "immediate action" to address the problem in a statement Sunday, after writing a letter to President Obama Saturday expressing his concerns. "

"In the letter, Sestak said only 2 percent of claims have been paid and that four of every five applications have been "rejected for minor oversight."

"In recent days, auto dealers across the country have been complaining that the reimbursement payments are slow to process. And they said some of their applications were being rejected because of apparent procedural issues. The statistics Sestak cited suggest those complaints are not based on isolated incidents. "

U.S. to suspend auto "clunkers" program

"The Obama administration will suspend a $1 billion program intended to spur U.S. auto sales after it approached its funding limit after only a few days, government and industry sources said."

"The program was expected to run through September 30 but the sources said the administration would suspend it within the next day."

"The government estimated 250,000 auto sales if the full rebate was granted. It is unclear how many vehicles have been sold under the program. The government formally launched the program on July 24."