Thursday, March 4, 2010

Reposessed Cars Up in 2010, Adds to Tight Used Car Market

The supply of used cars may be tight, as we looked at earlier in the day, but there is one area of supply that is growing and will be aiding car haulers: repossessions. Repos are up about 20% from last year, and the strong used car market means that the collection companies will recoup most of the value of the car from the resale at auction. The repo company featured in the article managed to sell 59 out of 62 cars at auction.

The tight use car market might encourage the “you’ve got a pulse and a job, you’ve got credit” used car lots, for if they can be assured that they’ll get the lion’s share of the value of the car back from a repo auction, they will be more likely to have loose credit standards, for a default may not set the firm back much. The strong used car market will mean that the sub-prime car lots will be buyers at the auctions if they aren’t merely recycling the cars they sold and repossessed.

That will mean that car carriers will want to make those sub-prime used car places part of their work matrix, since they will be a larger part of the used car market, especially as a number of GM nameplates go the way of the dodo and have no natural home for their sale. You know to look for an used Chevy at a Chevy dealer, but where do you find the Saturns and Pontiacs now that their dealerships have been phased out?


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