Americans buying used cars in record numbers

If used-car sales are any indication of what's ahead for new cars in the United States, automakers may have something to smile about after all. But they'll have to wait to find out.

Indeed, used-car sales are burning up the road, and, says the Automotive Information Council in Detroit, new-car sales historically follow used-car trends.

Also, the rising prices of the older models may convince more motorists to "buy new," carmakers assert.

Responding to "sticker shock," some people sneer that they will not pay the price of a new car but instead will buy a car that is two or three years old. "Yet there are only so many of those around," asserts Louis Lataif, head of the Ford division.

In other words, if the demand for late- model cars keeps up, carmakers expect that the market will run out of the lower-cost units and people may be forced to buy a new car. "What people will find," suggests Mr. Lataif, "is a two-year-old car that may be within $800 or $1,000 of a brand-new one -- and they'll take the new one."

New-car registrations last year hit a disappointing 8.7 million. But at the same time, American motorists bought a record 18,664,000 used autos, a fraction of a percent over 1979's previous high of 18,521,000, reports the Hertz Corporation.

Because of the higher prices, however, the total value of used-car sales in 1980 reached $70.8 billion, up some 6.1 percent over the previous year's total, says the world's leading vehicle-leasing firm. The average used-car price last year was $3,394, or 5.3 percent above the 1979 outlay of $3,602. New-car prices rose an estimated 12 percent in the same 12-month period.

What do people look for when they shop for a used car?

"The typical 1980 used car was 3.23 years old and had run 32,780 miles," says Hertz, up from the 1979 figures of 2.86 years and 29,030 on the odometer.

"The figures point up the fact that motorists are buying smaller cars, driving them fewer miles per year, and keeping them longer to combat the almost-explosive increases in transportation expenses," declares Hertz.

Further, in four out of five cases, the used-car purchase is the primary mode of transportation for the buyer. Simply, people are not buying older cars just for short trips around town. They're buying them as their major means of transportation.

The Hertz study shows that overall, used cars are about 40 percent cheaper to buy and run than comparable new models. Even relatively new models -- say, a year to 18 months old -- can cost up to 25 percent less than a new car. Detroit carmakers, however, say too few late-model used cars are around to satisfy the demand.

This fact, they expect, will force people into the new-car market.

Even so, if people can find a used car they like, they can save not only on the price of the car itself but also on interest and insurance premiums. This can more than offset any increases in fuel and upkeep expenses, according to Hertz.

A 1980 compact-sized sedan costs an estimated 39.8 cents a mile to run 10,000 miles a year for three years, declares the car-rental company. But, it adds, this same car bought used as a three-year-old vehicle and driven 10,000 miles annually for another three years would cost 23.9 cents a mile, a 40 percent saving, barring any major breakdown in the meantime.

Between 40 and 45 percent of all cars are still on the road after 10 years of operation, but by the 15th year, only about 5 percent of the vehicles of any model year are still on the road.

Roughly 67 million of the 105 million cars now on the road in the US are 1975 models or older.

Carmakers have their eyes on a lot of them.

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