Plunging Values of Used Vehicles Foil Rebound in New-Auto Sales

[Javaman]

http://www.bloomberg.com/apps/news?pid=20601203&sid=aeJBIZnlPvI0

Feb. 13 (Bloomberg) -- Doug Fox, owner of a Michigan Acura dealership, watched a deal evaporate last month when the 2006 pickup that a shopper planned to trade was appraised at $6,000 less than he owed.

Falling used-car prices have erased about 6 million potential buyers from the U.S. new-car market as they struggle with loan balances exceeding the value of their old vehicles, researchers at J.D. Power & Associates estimate.

Losing those trade-ins shows how the credit crunch is helping drag auto sales to their lowest level since the early 1980s, as lenders abandon the practice of letting consumers roll the deficit from an old loan into the purchase of a new vehicle.

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Prices paid for used autos, particularly large pickups and sport-utility vehicles, plunged in mid-2008 when U.S. gasoline surpassed $4 a gallon. The average used vehicle fetched 15 percent less at year’s end than in September 2007, according to Manheim Auctions, the largest operator of wholesale auto auctions.