Sunday, May 17, 2009

Substitute Goods for Consumers: New and Used Cars

Wonderful article from the Kalamazoo Gazette regarding the interactions of two related markets: new cars & used cars.

Extensive cool relationships discussed. Here's just one taste:

With prices on used vehicles continuing to rise and the market offering less selection on some models for used-car buyers, some dealers speculate it may not be long before buying new comes back around.

"Pretty soon it's going to get to the point where a new car's only going to cost you $2,000 more than a used car," Kocefas said.

The Associated Press reported last month that the balance may have already shifted in favor of new cars and that some new cars may actually be cheaper. It reported, for instance, that the average cost of a used 2008 Honda Accord EX sedan certified by the dealership was $21,544 in early March, according to car-buying Web site Edmunds.com. A new 2009 model cost $80 less. . . .

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