Used cars grab Utah motoring spotlight

The nation's deep and continuing recession may be wreaking havoc on the sale of new automobiles and light trucks in Utah, but there is one bright spot for many dealers -- used cars.

The number of used cars and trucks sold in Utah rose 8 percent during the first quarter of this year, compared with the fourth quarter 2008, according to data from the Utah Tax Commission. Nationally, the sharp U-turn in buying habits has led to a 5.8 percent increase in the price of used cars in the past year -- including a 16 percent spike since the beginning of 2009, according to the Manheim Used Vehicle Value Index.

In contrast, it was as if new-car sales fell off a cliff. They plunged 25 percent during that same time period.

"People are just being more careful with their money, and it's being reflected in their automobile buying decisions," said Alan Orton of Value Auto, a used car dealership in Salt Lake City. "Many now are recognizing the value of buying used."

For Tania Mumma, the opportunity to save money during these tough economic times was one of the big reasons she recently decided to buy a used 2008 Mazda Miata instead of a new car.

"I did a lot of research and a lot of shopping around," said Mumma, a collector for a payday lender. "By buying the car used -- and it had only 8,000 miles on it -- I was able to save thousands."

Ric Starnes, general manager for Carmax in South Jordan, said many buyers increasingly are considering the benefit of buying late-model used cars because the vehicles aren't subject to the dramatic depreciation in value that comes with purchasing new.

And in many instances those same customers are looking for late-model hybrid and diesel-powered vehicles.

Carmax, the nation's largest retailer of used cars, reported two weeks ago that customer searches on its Web site for used hybrid vehicles rose 4 percent in June over the previous month, while diesel vehicle searches rose 7

percent.

"I've worked at seven different Carmax locations in four different states and from what I've seen the demand in Utah [for used cars] is as high or on par with those areas," Starnes said.

Although recessionary pressures are helping increase the desire for used cars among Utah consumers, that same demand also has produced a shortage of pre-owned vehicles and contributed to an overall increase in prices.

"Buyers who bought their cars last year were the ones who really got the good deals," said Orton at Value Auto. "A year ago, I could have picked up a really nicely equipped 2005 Honda Pilot for $12,000 to $13,000. To buy that car now I'd have to pay $15,000 to $16,000."

One of the big reasons for a shortage of used automobiles is that with new-car sales down in Utah and across the country, dealers are seeing fewer trade-ins. To keep their pre-owned car lots stocked, many dealers are going to used-car auctions to buy inventory.

"I've been at auctions in California recently where buyers for Honda and Toyota dealerships bought every one of those makes that went through," Orton said. "They just raised their hand and kept it up until the bidding stopped."

There is another reason for the tight supply of used cars. Many of the car rental companies are holding on to their automobiles longer as they try to get more value out of their fleets.

"I recently was out of town and rented a car that had 40,000 miles on it," said Mark Miller, owner of Mark Miller Toyota in Salt Lake City. "You used to never see that kind of thing."

Miller thinks the days of stronger used-car sales might be numbered. The difference in the price between buying a late-model used car or buying new is narrowing because of a host of incentives. And trade-in values also are rising for those who are considering buying a new automobile.

On the national front, the Cash for Clunkers program passed by Congress is expected next week to provide additional incentives for consumers to buy a new car, said Craig Bickmore, executive director of the New Car Dealers of Utah.

"That program hasn't really kicked in yet because the government still has to write the rules under which that program will operate," Bickmore said. "Once it becomes available we're hoping that it will help unleash a lot of pent up demand for new cars."

steve@sltrib.com