New and used car prices temporarily higher

It's less of a buyer's market for many new and used auto shoppers this spring. But the situation appears temporary.

Experts say a variety of factors have combined to shift the supply/demand balance for many models, especially the most fuel-efficient Japanese ones, in favor of manufacturers and dealers.

First, an improving new car market has allowed manufacturers to scale back some incentives, such as cash rebates -- by an average of 30 percent from last year, according to CNW Research, which is based in Bandon, Ore., and tracks the market.

Then the March 11 earthquake and tsunami in Japan interrupted auto and parts production in Japan, leading to shortages of some new models assembled there and some, like the Toyota Camry, that are assembled in the United States with parts from Japan.

As a result, CNW says, buyers in May have been paying an average of 87 percent of "sticker" prices, after manufacturer and dealer discounting, up from a low of 75 percent in August 2009.

But CNW president Art Spinella adds two more factors: Manufacturers' suggested prices now are more realistic, leaving less negotiating room. And buyers are opting again for more high-profit extras like power windows and locks. "People are buying vehicles that have more content -- again," he said.

Used-car prices are rising, too. Many consumers struggling with higher gasoline prices and other rising costs have diverted from new car to used, says the NADA Used Car Guide, published out of McLean, Va., under the auspices of the National Automobile Dealers Association. "Strong demand for small used cars is driving up prices," the guide's senior analyst, Jonathan Banks, said in a report. The guide estimates that values of small cars like the Ford Focus, Honda Civic and Toyota Corolla will have risen by 18 percent in the first six months of 2011.

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Patrick Cassino, owner of the Sun Auto Group -- General Motors stores in Wantagh, Sayville and Old Saybrook, Conn., says there's also a shrinkage of used- car supply because new-car sales still are below pre-recession levels. "When there's a downturn in new-car sales, obviously there are fewer trade-ins," he said. It's supply and demand, of course."

Lee Certilman, owner of Nardy Honda in St. James, cites another factor at work: Dealers like him with fewer new models to sell have turned to used ones to keep the showroom busy, increasing demand at dealer auctions for used models. "We want to keep the volume up, keep the salespeople working and keep the dealership going," he said. Denis Dagger, general manager of Smithtown Toyota, who says he's short of Camry LE's and Priuses, said, "At the end of the day, we've got to pay our bills."

But there's no shortage of new models from Detroit's Big Three, and some buyers apparently have diverted to them. "People aren't walking in and saying, 'I was next door at Honda, and they don't have any cars,' said owner Frank Bellavia at Arnold Chevrolet Buick in West Babylon, "but we are selling a lot more [Chevrolet] Cruzes and Malibus." He says his new car sales are up 25 percent this year over last. Cassino says he's seeing the same.

CNW warns, however, of an impending marketwide slowdown. It says showroom floor traffic was relatively slow in early May and its latest survey of shoppers finds many jittery about rising fuel and food prices and their job stability.

And Certilman says used-car prices can't keep rising before consumers balk. "Dealers are stretching to get used cars, but at some point the buyers start to pull back," he said.

Toyota, Nissan and Honda have assured dealers that help is on the way, but full recovery isn't expected for several more months.