Small Used Cars Are Hot Sellers — If You Can Find One

By John Voket

According to the Better Business Bureau of Connecticut, as drivers watched gasoline prices rise over the summer, they started looking to trade their luxury cars and large SUVs for more fuel-efficient vehicles. And while some consumers are waiting for more hybrid cars to hit the showrooms and marketplace, others are looking to the rapidly dwindling inventory of fuel-efficient used cars.

If they can even find one to fit their budget.

To help diversify and attract a wider customer base to his shop, Jim Marcucilli of Berkshire Motors expanded his used car offerings in 2007, and converted an auto electronics showroom to a U-Haul franchise earlier this year. And while renting trailers and blankets and installing hitches has been paying off, he is finding it increasingly difficult to keep medium-priced, fuel-efficient used cars on his lot.

“Because I’m across from the high school, I’ve always gotten a lot of traffic from parents looking for medium-priced, fuel-efficient cars — typically four-cylinder models in the $3,000 to $5,000 range,” Mr Marcucilli told The Newtown Bee this week. “But now I go to price these models at the auction and the cars that used to provide a decent markup from wholesale or dealer cost are now priced close to retail.”

Since Berkshire will typically spend $500–$700 to “prep” a car for resale once it is acquired from a wholesaler or private seller, used auto dealers like Mr Marcucilli can only afford to handle vehicles with a corresponding markup potential. And those cars just are not out there anymore.

“I talked to a guy this morning who is ready to buy a seven-year-old Subaru Forester with over 150,000 miles on it for around $4,000. That’s high,” he said. “After my dealer prep and service, I couldn’t make a dime on that car.”

Mr Marcucilli said folks who are really hungry for a fuel-efficient low mileage deal are asking for manual transmissions, because they are oftentimes the only vehicles out there in an affordable range.

“Parents are teaching their kids to drive a stick,” he said. “The upside is manual transmissions also get better gas mileage.”

Danny Amaral at Amaral Motors on South Main Street is in the same boat, scouring auctions and for-sale-by-owner used car ads to try and find smaller fuel-efficient cars his customers are seeking.

“Your big cars are dead in the water,” he said, echoing the complaints from other used car dealers who are hungry for four-cylinder compacts. “When you go looking to acquire [four-cylinders] as a dealer, the prices are up in the sky. There’s plenty around, but good, gas-efficient cars are top priced.”

Still retailing new cars for Chrysler, he said the PT Cruiser is the new vehicle of choice among many of his clients. He describes the model as a small car but with average fuel efficiency — in the mid-20 MPG range with an automatic transmission.

In the early fall, Mr Amaral said he was lucky enough to get one Honda Accord as a trade-in, “but it sold immediately, within hours of putting it on the lot.”

According to Connecticut Better Business Bureau President Paulette Hotton Scarpetti, her agency offers a checklist for those shopping for a used vehicle.

 “Information is power in the hands of a consumer,” she said. “Used car buyers should learn all they can to save time and money, and prevent problems that can turn a good idea into a nightmare. If a consumer walks into a used-car lot uninformed, what was a good, money-saving idea could end up eating away the savings if the car is a lemon.”

There are several general rules for used vehicle buyers relating to selection of a seller, selecting the car, and financing. One of the most important is, if you have your eye on a particular vehicle, pay a trusted mechanic to inspect the car. The extra out-of-pocket expense may save you money down the road if major problems are discovered.

Mr Amaral suggests if buyers know where the car comes from it is an advantage.

“Then at least you’re a little more protected from the unknown,” he said. “You know the service record, whether or not the seller has owned the car since it was new, and if the vehicle had even been in a collision.”

Connecticut BBB offers the following tips for used car buyers:

*Do your homework: The Internet can be an invaluable tool for researching and comparing a particular vehicle’s reviews as a used car. Shop for a car that can deliver many miles on a gallon.

*Give the car a once-over: A used car inspection can tell many stories about its history and reliability and always should be made in daylight, to ensure you can see any dents, paint defects, cracks and other imperfections. Check the accelerator and brake pedal for signs of wear. If they are excessively worn on a car with “low mileage,” the odometer may have been tampered with to turn back the mileage. Also examine the ease with which windows, doors, and the trunk open and close. Problems with these may indicate collision or body damage.

*Test drive: If the car meets your standards, it is time to go for a test drive. Make a series of stops, starts, and turns at different speeds. Drive over rough road and listen carefully for any noises such as clunking and rattling. Never purchase a vehicle without first driving it.

*Know the law: If you are buying from a used car dealership, the Federal Trade Commission (FTC) Used Car Rule requires the dealer to post a window sticker disclosing terms of warranty, information on the availability of service contracts, a suggestion the buyer have the vehicle inspected and that the dealer put all promises in writing. Many complaints to BBBs from used car buyers concern problems found during inspection, and they received only verbal promises from salespeople that the problems would be fixed. Because the commitments were not put in the written sales contract, however, the repairs were often not carried out and the customer was left with no recourse. If the car is sold with a statement specifying the car is being sold “as is,” this means the consumer must pay for any repairs needed after purchase.

*Shop around for financing: Go to several financial institutions with the seller’s proposed purchase and finance contract. This is when a high credit score can result in lower financing interest rates. Compare the annual percentage rate, required down payment, and length of the repayment period.

*Finally, don’t shop alone when selecting a used vehicle. A second set of eyes and ears can help you uncover any red flags about a particular vehicle, and improve your chances of making a purchase which will pay for itself in gasoline savings.