GM & Chrysler Bankruptcies Not Affecting Used Market, Yet

Chrysler’s bankruptcy has yet to have a significant impact on used values. In May, Chrysler vehicles did not sustain increased volatility as a result of their bankruptcy filing at the end of April, according to Kelley Blue Book’s June 2009 Market Report. In fact, Chrysler values were flat overall, with cars and crossovers dropping 1 percent and 1.5 percent, respectively. SUVs actually appreciated by an average of 0.7 percent. Most surprisingly, the Chrysler Town & Country and Dodge Caravan minivans increased aggressively, appreciating 2.8 and 4.6 percent, respectively.

GM’s announced bankruptcy filing on June 1 is expected to produce a similar market response as the Chrysler filing. Even as the threat of a GM bankruptcy loomed during May, used values remained fairly stable. Overall, GM values dropped 0.6 percent, although SUV and van values appreciated 0.6 and 1.2 percent respectively.

The effect of shuttering dealerships and liquidating unsold inventory remains to be seen, but a dramatic increase at auction of new GM and Chrysler vehicles could put significant downward pressure on late model values. However, the long-term strength of each brand’s used values depends largely on post-bankruptcy actions and consumer perceptions.

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