SEATTLE — The car buyer’s market has reached a volatile point over the last year.
New vehicle prices are up 6% year-over-year, according to the U.S. Bureau of Labor monthly report, and inventory remains relatively low at many dealerships.
In a positive nationwide trend, the price of used vehicles is down 11% since last year. However, that price dip may not be reflected in Seattle.
"I don't want to say it’s empty, but it's not as full as we're used to," said George Riad, owner of Daily Deals Auto Sales. "Usually, you can't even walk in here."
Riad said a quality used car leaves the lot almost as fast as it arrives. Over the past year, he said it's been tough to keep enough inventory in stock without significantly raising prices.
"I've been in the business for 10 years,” Riad said. “I’ve never ever seen anything like that."
The pandemic supply chain backlogs are still trickling down to the small independent lots like Daily Deals.
The car lot on Aurora Avenue used to bring in eight or nine new cars a week, but Riad said they are now down to two or three.
"When I go to the auction every week, we're competing,” Riad said. “So, I’m competing with the new car stores to buy."
Riad said new dealers are holding onto the valuable trade-ins they get. Plus, he’s noticed not as many car owners are trading in.
"The good cars - they're not circulating as much as they used to," Riad said.
That comes at a cost to customers. The cheapest car is a ’99 Mercedes for about $5,000 on Riad's lot. Just about everything else is close to $10,000 and above.
"The biggest problem right now if average Joe wants quick transportation for a couple thousand dollars: nothing," Riad said. "Doesn't exist."
He said cars that he could buy a year ago for $6,000 now cost him $8,000. That leads to higher prices for prospective car buyers.
Meantime, the first quarter of the year hit a record high for monthly payments on new cars. According to Edmunds, the average monthly payment is $731. That is up more than $70 from last year.
The average down payment in 2023 is close to $7,000, Edmunds found.
Riad predicts the market will stay the same for the rest of the year but rebound in 2024.
“I think next year we’re going to see a whole different energy in the marketplace,” Riad said.
About 70% of customers are financing and 30% are buying cash at Riad's lot. However, just a year ago those figures were flipped.