Used Cars Tempt New-Car Shoppers, But Supply Lags.

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Car-shoppers facing financial difficulties have always had the option of turning to a secondhand model, even if they'd previously bought only new vehicles. The reason is obvious: used cars cost less. When dollars are short and job prospects limited, going secondhand (if not third- or fourth-hand) is the only sensible option.

Jeffrey Anderson, director of consulting & analytics for Experian Automotive, looked into trends in new-to-used migration during the second quarter of 2010, for that company's Automotive Industry Insights.

Just a few years ago (in 2007), roughly 2.5 used vehicles were sold for each new one that went to a customer. Early in 2009, as financial turmoil reigned and a large number of workers lost their jobs, the ratio of used vehicles to new grew to 4.2-to-1. That broadened differential didn't last long, though. Today, about three used vehicles are registered for every new one that's titled.

Back in the 2007-08 time frame, just over one-fourth of people who disposed of a vehicle they'd bought new turned to a secondhand model instead. In 2009, that proportion peaked near 30 percent, before reverting close to one in four again in early 2010.

Because economic problems remain intense, why aren't even more shoppers going secondhand, as they did a year or two ago? Shortage of supply is a leading reason. Shrinkage in new-car sales inevitably translates to fewer used cars on the market later on. Dealers complain loudly these days about the lack of used cars—especially clean late-models.

Dodge owners, according to Anderson, have had the highest rate of moving from new to used. Honda owners were least likely to migrate to the secondhand market. Hyundai owners showed high movement to used cars, but most other makes saw decreases in that phenomenon.

Used-vehicle owners typically return to the automobile market for another purchase twice as often as new-vehicle owners, but consumers are holding onto their cars longer. The average vehicle in mid-2010 was 10.3 years old, up from 10.0 years in 2009. Buick and Volvo owners tend to keep their vehicles the longest: more than 80 months for those bought new, and 50 months for used examples. Mini and Kia owners keep their cars for the shortest time period.

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