Used car lots struggle to keep running
Morton McArthur sells used imports in Cincinnati, OH. His sales have fallen, as people hold onto their cash or run into trouble getting loans.
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Steve Chiotakis: We're gonna hear about car sales numbers for April later this morning. Don't expect any miracles; they'll likely be anemic at best. With new car sales continuing to slide, larger dealers are getting by selling used cars. And that's making things tough for smaller lots. Marketplace's Amy Scott reports.
Amy Scott: Mort McArthur owns Mort's Imports in Cincinnati. I first talked to him about six months ago. For a sign of how the business has changed since then, he shows me an eight-year-old Honda Accord he's selling for $4,500.
Mort McArthur: Look at this. It has 215,000 miles on it already. Previously, I wouldn't have even been able to think you could sell 'em that high.
But McArthur doesn't have much choice. When people buy new cars, they often trade in their old ones. Traditionally anything with more than 100,000 miles on it, the dealer would unload to used car dealers like McArthur.
McArthur: But now, the new car dealers, since they're not selling new cars, are keeping those models. And they consider high miles 140, 150,000 miles. That's what's showing up more at the places where the wholesalers have them or at the small auctions that I go to to find cars.
Selling higher-mile cars is just one way McArthur has adapted to the recession. In better times, he sold 15 to 20 cars a month. But with credit tight and people out of work, he's now lucky to sell 10. So he's keeping fewer cars on the lot.
McArthur: The bane of a used car lot is dead batteries and flat tires. The gremlins get them in the middle of the night from somwhere. So I don't want a bunch of inventory sitting here and gettin' old.
In order to sell well-worn cars, McArthur spends a lot of time spiffing them up.
McArthur: Hey, what's up.
He takes me to a nearby paint shop to see about sprucing up a '98 Mustang. He's told it'll cost him about $1,500
McArthur: What if we did a Maaco-type job and just shot it?
Man: That's what I'm going to call and see if I could just seal it.
A lot of McArthur's competition has closed in the last year. He's cut back on his advertising. He hasn't paid himself in month.
McArthur: I just need to be able to survive the downturn. And to do that, what I have to do is just get smaller, sort of duck.
At this rate, he figures he can duck for maybe another year.
In Cincinnati, Ohio, I'm Amy Scott for Marketplace.