A Greenbacked Year On the Dusty Lots

While all eyes are on the pace of car sales in the nation's auto showrooms (April set another monthly record), 1963 is also proving a greenbacked year for the men who preside over the dusty, sunbaked used-car lots. Detroit watches used-car sales as closely as new-model sales in judging how long the auto boom can continue. The signs are encouraging: about four used cars are now being sold for every three new ones, and at least 13 million used cars will probably be sold in 1963. While used-car dealers can usually sell a "cream puff"--the car in good condition with a good paint job--they are doing so well now that many find little trouble in unloading the beat-up dogs. Boost from Below. The horse-trading system of selling new cars in the U.S. makes the used car a vital factor in new-car sales: in 74% of all new-car sales the dealer takes a used car as a trade-in. Bargaining is so hard that the dealer usually makes no profit until he sells the used car. If used cars are not selling, he understandably lowers the amount he will allow a customer on a trade-in. This, in effect, raises the price of the new car, and too much scaling down of prices can slam the brakes on any auto boom. There is, in fact, a school of thought in Detroit that argues that it all moves in cycles: as new-car sales increase, trade-ins bring in more used cars until the lots become clogged and prices begin to drop to move them. No one really knows at what point today's used-car market will be saturated. Year after year, used-car sales have steadily climbed: 1962's sales of 11.8 million were 13% over 1961, and this year's estimates reckon on another 10% gain. The increase in sales comes mostly from the bottom of the market--from teen-agers now reaching driving age, who grab up the six-and seven-year-old cars. A sale to one of them enables the previous owner to buy a newer used car for himself, so the effects continue right up the line to the newest models. And many families make their second car a used one. Good Until August. Because of the bigger demand for used cars, there are fewer bargains to be had. Prices are up slightly from a year ago even though there are more cars for sale, and the hottest used seller is the car that also leads the new-auto field: Chevrolet. Volkswagen also ranks high as a used car; last week at a wholesale auto auction, the place where the trade sets its prices, a 1960 VW carried a wholesale price of $1,080 v. $1,000 for a 1960 Ford Galaxie that when new cost $1,000 more than the VW. Because a bright red used car of any make attracts attention to the lot, it is worth $200 more than a car of any other color; and in the South, air conditioning can add up to $250 to the car's price v. only $50 in the North. The betting in Detroit is that used cars will keep on supporting new-car sales right through August. Used-car inventories now stand at a healthy 25-day supply, well below the 30-day level considered near the saturation point. After , August, the 1964s will come out and suddenly make used cars out of all the 1963s on the road--and then begins another year, and another game.

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