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July 26, 2010

Used car dealers reaping benefits of high prices


Used car prices reached their highest heights ever in May, and those who own used car dealerships are riding the wave of prices to increased profits. However, a shortage in a supply of used cars has left dealers searching to replenish their inventory.

With many automakers cutting production of new cars, some dealers have been left short of stock, reports CNBC. But those who do have inventory are reaping the benefits, as used car prices are hitting some of their highest levels ever, according to Manheim Auto Auctions.

"It's been a good year for dealers," said Thomas Webb, chief economist for the company.

Part of the reason for the high prices is a reduction in supply. During the economic recession, major automakers cut production levels. Although they have since increased them, those cars won't hit the used market for another two to four years.

"Every new car represents a potential used car down the road," Tom Kontos of Adessa told the news source.

As proof of the booming used car business, AutoNation, a chain of used car dealerships across the country, recently posted a 20 percent increase in revenue growth during the second quarter.ADNFCR-3173-ID-19908298-ADNFCR

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