Used cars acquire a polished image Consumers: Industry changes have made buying near-new vehicles less a sacrifice than a stroke of budgetary wisdom.

THE BALTIMORE SUN

At the end of a long workday recently, Andre Carter, still in his business suit and wearing a wide grin, was darting around a used-car lot in Laurel, beside himself over the alluring prices of some pre-owned trucks.

Long accustomed to buying new and avoiding the supposed risks of used vehicles, Carter had decided against splurging this time. The cash he would save, he figured, could go toward college tuition for his three children or a down payment on a new house.

"I could jump right out there and buy a brand-new truck," said Carter, 33, a technology engineer from Woodlawn. "But if I can save myself $10,000, I'm gonna do it."

Carter represents a growing segment of America that is recasting the stereotype of the used-car buyer as either cash-poor or a hopeless cheapskate. These days, wealthier consumers are capitalizing on the refurbishment of the used-car industry, which is offering more and better-conditioned cars, covered by a warranty and costing far less than new vehicles.

Stroll through used-car lots these days, and you'll likely find they're not what they used to be. The once-tawdry places, sometimes infamous for swindling sales pitches and shoddy products, sport a refinished image. Gone are the jumbo orange letters on windshields and the flapping flags. No longer seeing used cars as ugly stepchildren, dealers are proudly showcasing them as wise economical alternatives. And consumers are flocking.

The shift has been linked to a convergence of trends. Consumers' attraction to short-term leasing has left dealers with huge stockpiles of near-new models with miles left on their warranties. Better maintenance has given cars a longer life. And the average price of new cars has climbed steadily, breaking $20,000 and striking some consumers as inflated.

No longer a dumping ground

A decade ago, recalls David M. Rohlfing, a former Baltimore police officer who has been selling used cars since 1975, the used lot was where dealers dumped trade-ins, no matter what color, make, model or condition.

For many, today's improvements have made buying used cars less a sacrifice than a stroke of budgetary wisdom -- a way to save some money for a bigger house or a sunnier vacation.

"As the people who are raising kids begin to prioritize their income and allocate, it will become more and more fashionable to own used cars," said Charles M. Parker, president of the Automotive Information Network. "The new-car market in this country is pretty much beat in its growth."

South of Cockeysville, Frank Iacovelli, a salesman at Timonium Dodge-Chrysler-Jeep/Eagle, says it has become routine to encounter used-car buyers whose incomes would allow them to buy almost any model of new vehicle.

"You start filling out credit applications, and someone says he makes $20,000 a month," Iacovelli said. "Guess what? He doesn't want to throw his money away either."

According to a survey by J. D. Power and Associates, nearly 40 percent of used-car buyers in the first two quarters of 1998 had household incomes above $60,000. While there are no comparative figures for previous years, there is little doubt that affluent buyers have increasingly bought used cars in the past decade, said Bob Schnorbus, the company's director of macroeconomic analysis.

Whatever their income, more buyers have discovered the reality that once a new car is driven off a lot, it instantly loses a chunk of its resale value. Suddenly, a lower-priced, late-model used car doesn't look so bad by comparison. Throw in a manufacturer's warranty, and guarantee that the used car has been "certified" with a rigorous inspection, and even those who have always bought new may think twice.

Take Ann Stavely of Columbia, who, with her husband, Richard, and three children, drove off a lot in Laurel last week in a dark-green 1996 Toyota Corolla.

"We could afford a new car, but it's not worth it," she said. The couple shopped around to replace a 14-year-old Chevrolet Cavalier that had been bought new, and they pondered a new stripped-down Honda Civic costing about $15,000.

In the end, they opted for the used -- but loaded -- Corolla, with 30,000 miles and weeks left on the manufacturer's warranty, for just more than $12,000. The extra money, the Stavelys said, would help pay for their children's education at a private school in Ellicott City and for home improvements.

For Richard Stavely, a senior aerospace engineer at NASA, the purchase marked quite a shift in thinking. In the 1980s, used-car lots appealed to him about as much as beltway traffic jams.

"They were yucky," he recalled. "There was a little stigma."

Industry analysts began noticing a migration to used lots in the mid-1990s. The used-vehicle market had grown pretty much in lock step with the new market, responding to the strength of the economy. But in the current boom, the new-car market is flat, with annual sales around 15 million in the past four years. Used-car sales, meanwhile, have surged to 16 million annually since 1994.

Dealers are encouraging the growth of the used market, because pre-owned cars have become a bigger profit maker than new cars. Buyers of near-new vehicles tend to be unsure of what is a fair price. That fact, coupled with today's robust demand, has given dealers flexibility to boost prices on some used vehicles and an incentive to beautify their lots.

A new player in the auto industry, the used-car "superstore," has also been pivotal in erasing the stereotypes of used-car buying. CarMax Auto Superstore, whose lot in Laurel boasts 500 vehicles stretching in rows from a fortress-like dealership building, claims to offer a pleasant, haggle-free buying experience. Analysts say smaller dealerships have no choice but to clean up the image of their used lots as well.

"The way you are going to compete is to put in a sales process that is less intimidating and less stressful," said Schnorbus, the J. D. Power economist.

Whether the emergence of the near-new market is having far-reaching effects on the auto industry has yet to be seen. New luxury cars and sport utility vehicles are selling briskly, helping manufacturers enjoy healthy profits. Some suggest that when the economy does slow, and fewer people can afford higher-price vehicles, the move to used cars could accelerate, finally hurting the automakers' bottom lines.

On the other hand, those like George Pipas, a sales manager for Ford Motor Co., are mystified by suggestions that a big proportion of buyers have become more thrifty, given that luxury cars and pricey sport utility vehicles are leading the pack in new-car sales.

$20,214 for new car

What is indisputable is that higher prices have driven new cars out of reach of some consumers. Last year, the price of the average new car hit $20,214, according to CNW Marketing/Research. That marked a jump from just more than $16,000 in 1990, a measurable rise even when adjusted for inflation.

Norenzer White, a 50-year-old Randallstown man who said he was not fond of used cars a decade ago, was standing on a lot near Pikesville recently with his jaw dropped in front of a sleek 1989 Mercedes-Benz with alloy wheels, leather seats, tinted windows and a sunroof.

"This is something you can drive off the lot, wash it, and look like you're in good shape," he said. "This is upgrading my self-image."

Pub Date: 8/12/98

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