There's never been a better time to sell a used car, according to auto industry analysts. But buying a used car to replace that vehicle may be difficult.
Used cars are selling at record high prices, while demand for fuel-efficient models is growing. And local auto dealers are having a hard time keeping their showrooms stocked with pre-owned vehicles.
"I've been in this business for 30 years, and this is the weirdest I've ever seen it," said David Bowen, owner of B&L Auto Sales in Santa Rosa.
"It's a real phenomenon for us," said Henry Hansel, president of Hansel Auto Group.
According to a report this month by Kelley Blue Book, the value of used cars has grown by 20 percent since January, with fuel-efficient cars leading the uphill climb.
A used Toyota Prius, for example, increased in value nearly $3,800 since Jan. 1, according to the Kelley Blue Book report.
Hansel said some used Japanese cars manufactured in the last two years, especially the Honda Civic and Toyota Camry, have a current market value that's greater than the original sale price.
"If they ever wanted to turn their car into cash, there's probably never been a better time," Hansel said. "If they have a car to trade in, we're paying more for it."
Industry analysts attribute the sustained price increase to a number of factors. The recession has led many drivers to hold onto their cars longer, so there have been fewer trade-ins.
The leasing market slowed down in recent years, so there are fewer of those pre-owned vehicles returning to dealerships, said Joe Spina, senior analyst with Edmunds.com. And rental car companies also are holding on to vehicles longer, rather than returning them to dealerships for sale, Spina said.
Hansel and other local dealerships are aggressively looking for customers to bring in their used cars and replenish their inventory.
"I'll buy your car, I'll buy your boat, I'll even buy your goat," said Roger Whales, general sales manager at Hansel Ford. Whales did buy a boat recently from a customer, who then used the money to buy a used Ford Focus. The company has been buying used vehicles with much higher mileage than it used to, Hansel said.
Manly Honda has been heavily promoting its "Buy Back Program," advertising that the Santa Rosa dealership will pay up to 70 percent of the original suggested retail price of a 2008 Honda, and other deals.
Other used car dealers have become increasingly picky about what they add to their stock. Bowen said he's eased off on buying used cars, because he doesn't want to pass the inflated cost on to customers, nor does he want to be stuck with high-priced inventory when prices inevitably fall.
"The word gets out that the used market is going up, and naturally ... more people are trying to sell it on their own," Bowen said.
To adjust to the competition, Bowen said he's offering free extended warranties for used cars, among other perks. His wife checks Craigslist every day to monitor just how much people are asking for their cars and to make sure his prices are competitive.
His customers have been shopping there as well.
"One guy said he spent two days looking at 15 cars, and didn't buy one, because everyone wants these astronomical prices," Bowen said.