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US used car market mirrors UK

Many American used car dealers are complaining that the country’s recently-introduced scrappage scheme is hitting sales.

The cash for clunkers scheme, which strongly resembles the UK’s system, means that used cars are being scrapped leading to a shortage of used car stock.

The few used cars available are too high in price, which means customers just looking for something to drive will pay more.

But according to Manheim, used car prices in the US have been rising consistently since January, a pattern mirrored in the UK.

"The guy that needs a $3,000 to $4,000 truck, he's not going to be able to find it," said Todd Hamilton, a Miami used car dealer.

Another Florida dealer said prices have been high for nearly a year – well before Cash for Clunkers started last month.

He thinks prices are up because few people had been buying new cars, opting to hang onto their old ones rather than trade them in. That restricted the supply of used cars.

Gary McBroom, who runs a small used car site said used car prices have gone up by $700 or $800 recently. His cars retail for about $6,000.

"The cheap cars, they're not even here any more," McBroom said.

“If a new car dealer gets 25 trade-ins under the CARS program, that's 25 drivable vehicles that don't end up on used car lots.”
 

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