Local News

New Cars 'Racing' Off Lots, Even As Gas Prices Rise

Posted August 19, 2005

— For weeks, Chuck Underwood's 1999 Chevrolet Tahoe -- clean, serviced and blue book priced -- has sat on busy Chapel Hill Road in Raleigh. It gets no love from buyers.

"The interest has been underwhelming, to say the least," Underwood said.

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At a time when gas prices are sky-high, new cars are actually "racing" off the car lot, partly because of employee discount incentives.

The Big Three American automakers say they promise no gimmicks, no hidden costs and no inflated prices and that buyers will pay what employees pay.

While it may seem like a win-win scenario for everyone, some people, such as Underwood, are actually losing out on the deal.

Bruce Wells, an auto appraiser for Auto Appraisal Group, says Underwood's timing could not be worse.

"The market has never been like this before," Wells said.

Record gas prices suck the resale value out of older vehicles. Used models also struggle to compete when their brand new successors line up with a trunk full of discounts.

A Durham man looking to trade his 2002 Chevrolet Tahoe told WRAL that just months ago, prior to the gas price increase and employee discounts on cars, he was offered about $20,000 in trade. This week, he said was offered about $12,000.

"New cars are cheaper," Wells said. "The trade-in's going to be cheaper. The resale is going to be less."

The battle this summer for dealers such as Thompson Cadillac GMC is keeping vehicles on the lot.

Sales manager Wes Smith said he has had a record-setting month.

"We sold 168 new vehicles off of Thompson's lot last month," Smith said.

That is great for new-car dealers, but it leaves most people who want to sell or trade used vehicles in a tough spot.

"Not having the calls is definitely frustrating," Underwood said. "You're starting to go to plan B and C."

That could mean selling for less or driving it longer.

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