Monday, October 12, 2009

Blue Book Report: Compacts on the Rise, Stabilization Years Away

According to the Kelley Blue Book website, the small car market is seeing a bit of a rise in value, after it using the best fat burner on values when the gas prices stabilized. They also took a look at what the whole "Cash For Clunkers" program did to auto prices recently.

"Several cars that might have been traded in were scrapped in the last few months through the 'Cash for Clunkers' program and new-car inventories are just as low, helping to drive used-vehicle values up," said Alec Gutierrez, senior market analyst, Kelley Blue Book. "The compact market may have actually gotten too low this year due to irrational behavior and the overcorrection of the economy and gas prices."

The 'Cash for Clunkers' program concluded on August 24, yet its effects are still rippling through the automotive industry. While new-vehicle sales for July and August outpaced any other month this year, September sales have shown that the lift to new-car sales was only temporary.

"Many manufacturers increased production levels in August as it became clear that the 'Cash for Clunkers' program was moving metal and shrinking inventories," said Gutierrez. "With that increased production call taking place in August, those new inventories should be hitting showrooms in the next 30 days; however, it remains to be seen if demand will be sufficient to support the increased levels of inventory coming into the market."

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