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Used car prices up in Tampa Bay area

Though the market is down, used car prices are up at places like Bill Currie Ford on N Dale Mabry Highway in Tampa.

MELISSA LYTTLE | Times

Though the market is down, used car prices are up at places like Bill Currie Ford on N Dale Mabry Highway in Tampa.

For a lesson in supply-and-demand recessionomics, look no further than a Tampa Bay used car lot.

The demand for cheap cars is up. But the supply is down because fewer people are buying new cars, meaning fewer trade-ins.

The result: Used car prices are up.

"We used to call them 'dollar cars,' " said Eli Karem, a used car manager at Tampa's Courtesy Nissan. "But now that 'dollar car' is a $2,000 car."

While the average used car is still cheaper now than a year ago, prices are on the way up, according to Adesa, a nationwide auto auctioneering firm.

Between December and February, the average cost of a used vehicle increased hundreds of dollars. Even compact sport utility vehicles and full-size pickups, nearly unsellable during last year's gas price hike, ballooned by about $1,000. Only luxury used cars lost value.

Rosemary Daft, 80, has felt the jump.

Six months ago, she spent $8,000 on a used Hyundai Accent for her granddaughter, Stephanie, a 25-year-old mother who commutes to nursing school.

This week Daft went looking for a car for herself at Jerry Ulm Dodge Chrysler Jeep. After surveying the fleet — pricier this time, she said — she clutched a Styrofoam cup of soda and took cover from the heat.

She peered out at the lot as she waited for her loan to be approved.

Daft's trade-in, a 2002 Dodge Intrepid, didn't net much, she said. Coupled with a recent increase in her homeowner's insurance, the car payment had her worried about her budget.

"I said, 'Well, we'll just have to back down a little bit and look for something a little older,' " Daft said. The 2007 Chrysler Sebring she settled on cost about $11,000 — $3,000 more than she hoped.

Most used cars begin as trade-ins, which have become scarce as fewer people buy new, dealers said. Drivers also are keeping their cars longer, flaws and all, rather than take on another monthly payment.

"What we're seeing is people trading out of necessity rather than want," said Joe Fitzgerald, a used car manager at Stadium Toyota in Tampa.

That decrease puts a strain on supply, especially as shoppers aim for affordability, dealers said.

Mike Valdes, a used car sales manager for Bill Currie Ford Lincoln Mercury in Tampa, said prices have jumped 15 percent since January.

"Our prices are sky high compared to what they were at the beginning of the year," said Scott Harris, a wholesale buyer for Jerry Ulm Dodge Chrysler Jeep. That could be good news for drivers willing to trade, he said.

"There's nothing that rolls that I won't put a figure on," Harris said. "The consumer wins in the end."

But not when it comes to the bill. Shoppers are shouldering most of this price increase, dealers said.

"Dealers couldn't shrink margins any more," said Tom Webb, the chief economist for Manheim, a national wholesale auctioneer. Prices likely will continue to climb for several months, he said.

Despite the price uptick, dealers said they didn't expect used car demand would U-turn anytime soon. Since 2003, Floridians have bought three times as many used cars as new ones, according to data from CNW Marketing Research, which studies the auto industry.

Car manufacturers and the federal government, trying to rebuild confidence in the domestic auto industry, have worked to entice buyers away from used vehicles. Tax credits for new car buyers and a government-backed warranty program for new General Motors and Chrysler vehicles could "lead to as many as 100,000 new car sales," President Barack Obama said Monday.

Those efforts won't help Daft.

"It's just a tough market out there," she said as she took a break from paperwork and stretched her legs near the dealership door.

Drew Harwell can be reached at dharwell@sptimes.com or (813) 226-3386.

Used car prices up in Tampa Bay area 04/02/09 [Last modified: Monday, April 6, 2009 8:40am]
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