Used cars costing more as GM strikes continue Some dealers looking to auctions for more of those popular SUVs; Auto industry


The strikes at two General Motors Corp. parts plants in Michigan are beginning to have an impact on used-car prices.

"Some late-model GM vehicles are bringing $1,500 to $2,000 more at auction today than they were 30 days ago," Raymond C. Nichols, chairman of BSCAmerica Inc., a Baltimore-based company that operates six auto auctions throughout the country, said yesterday.

Nichols noted that the hot-selling sport utility vehicles are posting the biggest gains.

Some GM dealers around the country have sold out of new Suburbans, Yukons, Tahoes and Blazers, and are looking to used-car auctions for late-model sport utility vehicles for their customers.

The price increases are not limited to the sport utility vehicles. "It's across the board for GM models -- passenger cars and trucks," Nichols said. He noted that the wholesale price of the compact Chevrolet Cavalier has gone up $1,000 or more.

Those increases are being passed on to consumers, said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co., in Richmond, Va., who pays close attention to the used-car market.

"The consumer is paying the higher prices, plus a little more," said Gassman, who pointed out that dealers typically add 10 percent to their cost for profit.

Gassman said new-car dealers are looking for something to sell as their supplies of new vehicles dwindle. "They need inventory," he said.

Nichols said the impact of the GM strikes comes as used-car prices are already rising.

"It's easy to say the increase is due to the GM strike, but prices are strong along most product lines," Nichols said of models made by Ford Motor Co., Chrysler Corp. and the import manufacturers.

Prices of Ford and Chrysler products have also risen in recent months, but not as much as those of GM vehicles, Nichols said. He said the demand has been particularly strong for 3- to 6-year-old cars.

"Cars last longer today, and I think people realize there are some pretty good buys on the used-car lot," Nichols said.

Because of the lack of available new cars, used-car prices didn't drop in May and June, as they usually do, William Stierwalt, GM's director of used-car distribution, told Automotive News, an industry trade publication.

jTC Stierwalt said the shortage has been compounded by rental car companies that are holding on to their fleets as they wait for new GM products to arrive.

Gassman said auto manufacturers are beginning to cut back on their incentive and rebate programs on new cars, and that has helped fuel the sharp increase in customers on used-car lots.

Nichols said he has been watching the used-car market since the 1960s and has noticed that prices are usually strong in the spring and taper off a bit in May, June and July.

But the market was off this spring, he said, "and I think that consumers are finally getting around to spending on their transportation needs.

"This has been one of the more robust used-car markets of the past 10 years, Nichols said.

"And, if this strike continues, it's going to be a strong used-car market throughout the summer."

Pub Date: 7/17/98

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