Used Car Market No Longer A Bargain-Hunter’s Paradise

UPDATED 05/10/11 6:56 p.m.

CHICAGO (CBS) — While the cost of homes is dropping, the cost of used cars is going up.

As CBS 2’s Derrick Blakley reports, bargains are scarce in what was once a bargain shopper’s paradise.

The price of a particular used car is supposed to go down every year.

It’s called depreciation.

Not anymore.

A severe shortage of used cars has sent prices skyrocketing– with buyers experiencing sticker shock.

Ramon Valle of Darien is shopping the car lots, looking to downsize to escape the gas price squeeze.

He just got caught in another price squeeze, with used car prices going up. It’s forcing him to question the best deal: new or used?

“That’s my dilemma right now. Which way will I go, will I go for a used car or a new car,” he said.

It’s a dilemma because used car prices are at their highest levels ever.

“Used car prices are skyrocketing, especially on fuel-efficient vehicles,” said Jason Roberts of Advantage Chevrolet.

Cars. com says average used car prices are up 10 percent in the last year. Some vehicles are up much more, including Hyundai, up 22 percent, Mercury, 19 percent and Ford 14 percent.

“They’re huge increases and people when they think of used cars think they’re going to be cheaper year after year,” said Patrick Olsen of “We’re in this weird vortex where it isn’t happening.”

It’s basic supply and demand. The availability of used cars is down, way down. The cars for clunkers incentive program made used cars scarce. After the Japanese earthquake, dealers are now paying up for small used cars to replace new cars they can’t get.

That means, as car shopper Larry Mitch found, used cars prices are looking at lot less used.

“They are, they’re getting close to new car prices,” Mitch said. “That’s what i see.”

“In some cases, it may be better for a consumer to go with a new car with better financing than a used car whose price is higher than it normally would be,” Olsen said.

  • Johnny

    This is really a weird vortex we are going through. Those hummers and large vans are very cheap now because they swallow up tons and millions of gallong on short trip to Nevada. My bettle was better than those trucks that you spend so much money on and the gas you put in does not last long enough to get you somewhere in the woods. Please start making small electric cars so people will have something to take them to work every day. Solar paneled cars? Anywhere? we want to buy those too. Can anyone figure out how to make them?

  • Vicky

    VW Jetta TDI. Cheap, luxurious, free maintenance and gets mileage that beats Prius.

  • ismael martinez

    Buy new no way. I bought a brand new car in 2004 only to have it sandblasted by the salt trucks in the highway. My son and i switched cars and i got a corolla which i am extremely happy with it. I get 30 mph and is very reliable and i can do my own maintenance. When you buy a used car you have to take your time ,research prices and be willing to tell a salesman to kiss off. If you are trading a car do not give them the keys, they want to keep them and it is much better to sell the car yourself.

  • albert stanley

    1996 saturn is good on gas.

  • CF

    I can get combined 42 MPG (summer) and 36 MPG (winter) on a 1992 Nissan Sentra 4-speed stick. I use some of the hybrid tricks and give up stuff like AC, pwd window and steering ..etc.

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