A 10-year-old baby blue Volkswagen Beetle was the most recent impulse-buy for used-car manager Josh Levasseur.
The owner, an 88-year-old woman living at a nearby retirement home, had brought the car to the service department at the dealership where he works. Mr. Levasseur noticed the vehicle’s low mileage, and figured the owner wasn’t driving much and might be inclined to sell. They eventually settled on a price of $5,000.
“It was a vehicle that I never would have tried to find or buy before,” said Mr. Levasseur, who works at Planet Chrysler-Jeep-Dodge-Ram in Franklin, Mass. “We just needed cars to sell.”
Used-car salespeople have long wanted to know what they can do to get you into one of their models. Now they want to know what it will take to get you out of yours.
The availability of used vehicles has grown scarce in recent months as fewer people traded in vehicles or returned leases this spring due to virus-related restrictions. Many dealerships were closed or did limited business in early lockdowns, and lease extensions were a common form of Covid relief from lenders. Meanwhile, economic worries as well as a shortage of new cars due to factory closings have sent more buyers to the preowned car lot.
After a drop in April, auto retailers sold a total of 2.1 million preowned vehicles in May and June, a nearly 9% increase over the same two-month period in 2019, according to research firm J.D. Power.
Used-car manager Josh Levasseur bought this 2009 Beetle from an owner who had brought it in for service.
Photo: Josh LevasseurUsed-car stockpiles at dealerships dwindled to just under 2.2 million vehicles by late July, a roughly 22% drop from a year earlier, according to research firm Cox Automotive.
Mr. Levasseur said he has been monitoring the used-car auctions—a dealership’s main source for replenishing supplies—but other dealers are paying “astronomical” prices in frenzied bidding.
“The only reason I watch is to see how stupid someone is going to be,” he said.
The average price paid at auction for a used vehicle rebounded from $12,548 in April—its lowest point in three years—to an all time-high of $14,895 in June, according to vehicle auction operator Manheim.
George Chamoun, chief executive of ACV Auctions, a virtual used-car auction, said he has sometimes seen more than 100 dealers fighting over one vehicle. “We’re seeing the same competition over $5,000 cars as we see over $50,000 cars,” he said. “It’s really an unprecedented time.”
The most-purchased cars in the used market from June 20 to July 20 were two SUVS, the 2019 Toyota RAV4 and the 2017 Ford Escape according to Cox Automotive. The most popular preowned models tend to be driven more by supply—especially models coming out of leases—than demand.
Used sales manager Bill Gogola recently came across a batch of six 2019 and 2020 Buick Regals with low mileage in an online auction. Mr. Gogola, who used to mostly oversee sales, now dedicates up to seven hours a day scouting vehicles at virtual auctions.
He said he had to outbid his competitors more than 300 times to secure the now-discontinued Regals, which he got for about $29,000 each—and one of them still got away.
“I was pulling my hair out of my head,” Mr. Gogola said. “It was getting ridiculous.”
Bill Gogola with a 2019 Buick Regal he purchased at auction.
Photo: Sellers Buick-GMCIn late April, Tom Hemmersmeier told his staff at Jerry Seiner Dealerships in Salt Lake City, Utah, to focus on finding cars they could buy from individuals on the internet.
His sales employees typically get a bonus when they sell a vehicle. Now he is also offering a reward if they bring him a used one—$100 for more average models and up to $250 for more popular styles, such as diesel pickup trucks.
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Kevin Forman of Mesa, Ariz. said he was shocked when a salesperson from a nearby Honda dealership called with an offer for his 2005 Chrysler Town & Country minivan, which he had listed online. After some negotiation, they agreed on a price of $2,200—about $1,000 better than some other offers he had gotten, he said.
“I was totally surprised, and honestly a little skeptical,” Mr. Forman said. “But it ended up going really smoothly.”
AutoNation Inc., the retailing chain that owns the Honda dealership, expanded its We’ll Buy Your Car program to all dealerships nationwide this summer to meet greater demand. Larger teams of salespeople have been hitting the phones and scanning the internet to track down cars for the used lot.
The dealership bought 6,000 used cars directly from consumers in the second quarter and expected to purchase another 3,500 preowned vehicles in July, chief executive Mike Jackson told investors late last month.
Mr. Levasseur’s inventory is down to 50 vehicles.
Photo: Planet Chrysler-Jeep-Dodge-RamGary Dering of Gig Harbor, Wash., wanted to buy a used 2016 Lincoln MKX, but he said he couldn’t get his local Ford dealer to budge on a $28,000 list price. He almost walked away. Then he started negotiating the price to trade in his 2009 Mercury Mariner.
“The sales guy finally came to me and said, ‘You have to tell us what we have to do,’ and I told him he’d have to throw a couple grand more on the trade-in price,” Mr. Dering said.
The dealer’s initial offer for Mr. Dering’s Mariner was $2,000. They ultimately bought it for $6,200, he said.
In Massachusetts, Mr. Levasseur, who bought the VW Beetle, has seen his inventory dwindle to 50 vehicles, from nearly 140 in April. Nothing stays on the lot for long.
By the time he got the Beetle cleaned up and priced to sell at $7,999, he said, it was a matter of days before a father picked it out for his 16-year-old daughter as a birthday present.
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