In the market for an affordable used car? Good luck - Press Herald

kuekuedunia.blogspot.com

A line of used vehicles for sale at Lee Auto Mall in Westbrook. The percentage of used vehicles priced under $20,000 has dropped from 47% in 2019 to 8%, creating a real pinch for shoppers in the market for an affordable used car. Brianna Soukup/Staff Photographer

A dearth of affordable used cars in Maine is pinching shoppers in the wallets and the wish lists.

Eight months into 2023, only 8% of used cars are priced under $20,000 in the Portland-Auburn region, according to a study from iSeeCars, an automotive data research company. It’s a new normal for Mainers, who in 2019 could find 47% of used cars for sale under $20,000. Nationally, about 12% of used cars come under that threshold.

The market has been building to this moment since the start of the pandemic. That’s when supply chain issues kicked in – leading to fewer new cars on dealer lots, and the vehicles that were available were expensive.

In response, more people decided to hang onto their older cars rather than buy new ones, creating scant inventory of used vehicles.

That means buyers are jumping through hoops to find affordable preowned cars. And they’re pushing their budgets when they can’t.

Dominick Litchfield, 20, of Topsham, has battled that reality since January, when he began the search to replace his 2005 Ford Ranger. Litchfield quickly discovered that he’d have to set his budget at $20,000 to find something in this market. That was still a lot of money for him, but he felt he had no other choice.

“I just wanted to quickly find something cheap,” Litchfield said. “The price range definitely stressed me out quite a bit and it definitely slowed me down.”

Even with a higher budget of $20,000, it took Litchfield over seven months to find a new ride.

Dominick Litchfield, 20, of Topsham, with his newly purchased used 2018 Dodge Durango. Carl D. Walsh/Staff Photographer

That is the reality for most people in Portland and across Maine, said Adam Lee, chairman of the board for Lee Auto Malls, which has 14 new and used car dealerships across the state.

Lee said that in 2023, only 60 to 70 of the 500 used cars for sale at the dealership lots have been listed at $20,000 or less. Five years ago, customers could find around 200 used cars for $20,000 or less among the 700 at the Lee Auto Mall lots.

It’s the same story at Pape Chevrolet in South Portland. General Manager Andrew Koocher said Tuesday there were perhaps three used cars on the lot that go for less than $20,000.

The iSeeCars study has found nationally, the average price for a one- to five-year-old used car is $34,491 – up $11,140 from 2019. Meanwhile, data shows that while used cars get pricier, their odometer readings are climbing, too. A car going for $15,000-$20,000 comes with an average of 60,000 miles.

MATTER OF SUPPLY AND DEMAND

The shift began at the start of the pandemic, when supply chain issues led to a shortage of microchips for vehicle manufacturers. With fewer options on the market, new vehicles got more expensive.

In 2015, a U.S. car dealership on average sold 1,051 new vehicles per year at an average price of $33,456. Seven years later, new car sales dropped to 819, but the average price rose to $46,287, according to data compiled by the National Auto Dealers Association.

As sticker prices climbed on new vehicles, people became hesitant to buy something new and trade in their old cars – which is where dealerships get a majority of their used-car inventory.

Lee said some people are riding their cars to the deathbed or are buying their leased cars. The ripple effects even extend to garages, where mechanics are doing more work for owners who are holding onto their cars for longer.

All in all, it’s a perfect storm that has led to little inventory in the used-car market.

As a result, car dealerships are watching their business models shift. Before 2020, two out of three cars Lee Auto Malls sold were used. Now, two out of three sales are for something new.

Moreover, Lee said the days are gone when the dealership could buy an inexpensive car in good condition at an auction and fix it up to make a profit.

“We’d be able to sell somebody a car that was OK. Now, those cars don’t seem to exist, and if they do, they’re just not worth buying,” Lee said. “Now, a $2,000 or $3,000 car, we wouldn’t sell it to anybody because it’s not OK – it’s junk.”

It’s a market change that has taken Lee and Koocher by surprise.

“There was a point where the prices for used cars – like a one- or two-year-old car – was equaling the price of new cars, because you couldn’t get a new car,” Lee said. “I would never have anticipated that.”

The dealerships are still making their profit, though. Koocher and Lee both said the shrunken market hasn’t really impacted their businesses’ bottom lines. Even if there are fewer cars to sell, the dealers are selling them at a higher price so their margins are still solid.

Lee, however, is concerned about the toll this market is taking on residents in a rural state where a lack of accessible, public transportation poses barriers.

“This is a huge issue. And transportation, really, in many cases is the difference between whether someone can work or not,” Lee said. “I’ve had these conversations with so many different groups. There’s no magic, there’s no trick where we can figure out how to make a car cheaper. I don’t know what the answers are.”

Used cars for sale at Lee Auto Mall on Wednesday. Brianna Soukup/Staff Photographer

STARK REALITY

Litchfield believes he’s one of the lucky ones. Well, lucky-ish.

On Wednesday, he went to Lee Auto Mall’s Westbrook location with a check in hand. He was preparing to put a down payment on a 2018 Dodge Durango that he’d be taking off the lot later that day.

He spent seven months waiting for those keys, putting in untold hours researching interest rates and monitoring prices across the state. He also visited 13 dealerships – often leaving with his head hung low.

But even with all of the research, all of the visits and talks with dealerships, Litchfield still landed $9,000 over budget. He’ll be paying around $600 a month for his $29,000 car.

Litchfield is still grateful, though.

“It is very bittersweet, but you gotta do what you gotta do,” he said.

Invalid username/password.

Please check your email to confirm and complete your registration.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

« Previous

American Airlines sues a travel site to crack down on consumers who use this trick to save money

Maine supporters of a right to a clean environment encouraged by Montana ruling

filed under: