Used cars acquire a polished image Consumers: Industry changes have made buying near-new vehicles less a sacrifice than a stroke of budgetary wisdom.

August 12, 1998|By David L. Greene | David L. Greene,SUN NATIONAL STAFF

At the end of a long workday recently, Andre Carter, still in his business suit and wearing a wide grin, was darting around a used-car lot in Laurel, beside himself over the alluring prices of some pre-owned trucks.

Long accustomed to buying new and avoiding the supposed risks of used vehicles, Carter had decided against splurging this time. The cash he would save, he figured, could go toward college tuition for his three children or a down payment on a new house.

"I could jump right out there and buy a brand-new truck," said Carter, 33, a technology engineer from Woodlawn. "But if I can save myself $10,000, I'm gonna do it."

Carter represents a growing segment of America that is recasting the stereotype of the used-car buyer as either cash-poor or a hopeless cheapskate. These days, wealthier consumers are capitalizing on the refurbishment of the used-car industry, which is offering more and better-conditioned cars, covered by a warranty and costing far less than new vehicles.

Stroll through used-car lots these days, and you'll likely find they're not what they used to be. The once-tawdry places, sometimes infamous for swindling sales pitches and shoddy products, sport a refinished image. Gone are the jumbo orange letters on windshields and the flapping flags. No longer seeing used cars as ugly stepchildren, dealers are proudly showcasing them as wise economical alternatives. And consumers are flocking.

The shift has been linked to a convergence of trends. Consumers' attraction to short-term leasing has left dealers with huge stockpiles of near-new models with miles left on their warranties. Better maintenance has given cars a longer life. And the average price of new cars has climbed steadily, breaking $20,000 and striking some consumers as inflated.

No longer a dumping ground

A decade ago, recalls David M. Rohlfing, a former Baltimore police officer who has been selling used cars since 1975, the used lot was where dealers dumped trade-ins, no matter what color, make, model or condition.

For many, today's improvements have made buying used cars less a sacrifice than a stroke of budgetary wisdom -- a way to save some money for a bigger house or a sunnier vacation.

"As the people who are raising kids begin to prioritize their income and allocate, it will become more and more fashionable to own used cars," said Charles M. Parker, president of the Automotive Information Network. "The new-car market in this country is pretty much beat in its growth."

South of Cockeysville, Frank Iacovelli, a salesman at Timonium Dodge-Chrysler-Jeep/Eagle, says it has become routine to encounter used-car buyers whose incomes would allow them to buy almost any model of new vehicle.

"You start filling out credit applications, and someone says he makes $20,000 a month," Iacovelli said. "Guess what? He doesn't want to throw his money away either."

According to a survey by J. D. Power and Associates, nearly 40 percent of used-car buyers in the first two quarters of 1998 had household incomes above $60,000. While there are no comparative figures for previous years, there is little doubt that affluent buyers have increasingly bought used cars in the past decade, said Bob Schnorbus, the company's director of macroeconomic analysis.

Whatever their income, more buyers have discovered the reality that once a new car is driven off a lot, it instantly loses a chunk of its resale value. Suddenly, a lower-priced, late-model used car doesn't look so bad by comparison. Throw in a manufacturer's warranty, and guarantee that the used car has been "certified" with a rigorous inspection, and even those who have always bought new may think twice.

Take Ann Stavely of Columbia, who, with her husband, Richard, and three children, drove off a lot in Laurel last week in a dark-green 1996 Toyota Corolla.

"We could afford a new car, but it's not worth it," she said. The couple shopped around to replace a 14-year-old Chevrolet Cavalier that had been bought new, and they pondered a new stripped-down Honda Civic costing about $15,000.

In the end, they opted for the used -- but loaded -- Corolla, with 30,000 miles and weeks left on the manufacturer's warranty, for just more than $12,000. The extra money, the Stavelys said, would help pay for their children's education at a private school in Ellicott City and for home improvements.

For Richard Stavely, a senior aerospace engineer at NASA, the purchase marked quite a shift in thinking. In the 1980s, used-car lots appealed to him about as much as beltway traffic jams.

"They were yucky," he recalled. "There was a little stigma."

Industry analysts began noticing a migration to used lots in the mid-1990s. The used-vehicle market had grown pretty much in lock step with the new market, responding to the strength of the economy. But in the current boom, the new-car market is flat, with annual sales around 15 million in the past four years. Used-car sales, meanwhile, have surged to 16 million annually since 1994.

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