ECONOMY: Pricing bubble develops for used-car market as sales hit 13-year high

Times might never be better for selling a used car.

Used autos are flying off dealer lots at the fastest pace ever, and commanding top dollars, according to two firms that track automobile sales trends.

In fact, sales have hit a 13-year high at auto dealerships in North San Diego County and Southwest Riverside County, according to Diamond Bar-based HdL Co.s , which tracks sales receipt data statewide.

HdL's analysis of sales tax receipts for car sales in Carlsbad, Encinitas, Escondido, Poway, Vista, Temecula, Murrieta and Lake Elsinore shows that more used cars were sold in the fiscal year ended March 31, 2011, than in any year since March 31, 1999, just as a recession was forming then at the tail end of the go-go Internet years.

The HdL data was culled from information compiled by the state Board of Equalization, and typically isn't released publicly for about three to four months after a quarter ends. The board manages sales-tax receipts of all kinds, including meal purchases at restaurants and gas pumped at service stations.

"Auction prices (for used cars) are holding up very well on the law of supply and demand," said Don Vestal, an analyst of car sales for HdL.

The HdL data show that used-car sales hit their highest level in the past fiscal year, surpassing the previous peak seen four years earlier, just as the nation slipped into the Great Recession.

However, used-car prices may have peaked for small, fuel-efficient models because of an easing of gas prices, said Kelley Blue Book , an Irvine-based automobile valuation company.

Since the start of the year, used-car prices for compacts jumped $2,200, or an average of 22 percent, while hybrids rose $3,000, or 20.4 percent, according to Kelley Blue Book. If fuel prices continue to hold or fall slightly, Kelley anticipates that used-car prices may decrease up to 5 percent more by September.

When an automobile is purchased at a dealership, an 8.75 percent state sales tax is collected by the state Board of Equalization, which then returns 1 percent to the city where the purchase was made.

The demand for used cars has come amid rising fuel prices, production disruptions in Japan of fuel-efficient cars that consumers in the U.S. can't get fast enough, and consumers who are unwilling to open their pocketbooks for new cars, given faltering confidence in the economy.

Some even think that a "pricing bubble" has emerged and is on the cusp of bursting this summer, as gas prices continue to weaken and auto production lines in Japan begin humming again, sending cars and desperately needed parts to the United States.

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