USED-CAR PRICES TO RISE

Used-car inventory to shrink.

February 1, 2004—With 2004 the first year to see a big decline in off-lease units, used-car prices should start to improve, said Manheim Auctions chief economist Tom Webb yesterday. New-vehicle leases last year fell to less than half their 1999 peak and likely bottomed out at 1.8 million. Webb does not expect automakers to ramp up lease subvention again. “It‘s not so much a case of being burned twice as being burned three times, ” he said.

Off-rental units were down in the past three years because they’re tied to declining air travel. Automakers partly made up for this by cycling them through fleets faster, but they were still the weakest segment last year, Webb said.

Franchised dealers sold 16.2 million used vehicles last year, with certified used cars at 1.5 million, up 15 percent. The popularity of certified cars has led to dealers selling more used cars of the same brand that they sell new, said Webb. Many dealers are continuing to establish separate lots for older used cars.