FARMINGTON HILLS, Mich. — The phones ring incessantly, customers scurry through the showroom--some lured by coupons for free canned hams--and George Hawes Jr. exhorts his troops to move the metal.
Wearing a dark plaid sport coat and a patterned tie, the burly, 30-year-old Hawes is a study in perpetual motion--barking into the phone, haggling with buyers, signing off on deals.
"Make a deal for me now," one car salesman implores, seeking a high trade-in allowance for an eager customer. "You know it's not worth $2,000," Hawes replies. "But do it if you need it to seal the deal."
It's done and another used car is driven off the sprawling lot.
Welcome to Bob Saks Motor Mall, one of the biggest franchised new-car dealerships in southeastern Michigan. What sets it apart is that roughly six out of every 10 cars it sells have had previous owners--more than double the ratio of five years ago, according to Hawes, the used-car manager.
One customer, Jim Smith, recently bought a 1992 Chevrolet Caprice station wagon for $10,000. "I can't afford a new car," said Smith, a United Parcel Service driver with a wife and four children.
He has lots of company. In a fundamental shift in American buying habits, many cost-conscious consumers are buying used cars because new ones are too expensive.
"New cars are being sold increasingly to the well-to-do. It's become like the boat industry," said Arthur Spinella, an auto consultant with CNW Marketing Research in Bandon, Ore. "It's not exactly what Henry Ford envisioned when he built a car for the masses."
Once much maligned, used-car lots are achieving new respect as upscale customers seek out late models with low mileage and high quality, and franchise dealers eye used cars as major profit centers.
"The used car has come of age," said Doug Dohring, an automotive consultant based in Glendale.
Consider:
* While consumer spending on new cars has remained largely flat for five years at less than $100 billion a year, expenditures on used cars have increased 67% to $55 billion annually, according to the U.S. Department of Commerce.
* As many as 45 million used cars and trucks change hands each year--three times the number of new vehicles sold.
* Franchised dealers sell more used cars than new ones and, more important, make more money from used cars.
* The popularity of leasing has created a new, hot-selling category--so-called "nearly new" cars. These low-mileage vehicles are returned to dealerships for resale within three years.
* The average price paid for a new car is about $20,000, up 24% from five years ago. Family income--about $37,800 annually on average--has increased at less than half that rate. The typical used car costs about $9,200.
These forces are rippling through the American auto industry. New-car sales are weakening after several years of increases, and would be even softer were it not for the millions of consumers being lured to the latest models by leasing.
At the entry level, small-car sales have slowed partly because consumers are buying bigger used cars instead of smaller new ones. That means, for example, that a slightly used Ford Taurus mid-sized sedan costs the same as a new Ford Escort subcompact.
Even luxury-car buyers are looking for bargains in hand-me-downs. Because most cars and trucks lose 30% to 40% of their original value in two years, buying a good used car can be a smart decision.
"The wise consumer today is buying a nearly new car," said Dennis Virag, head of Automotive Consulting Group in Ann Arbor, Mich.
He recently bought a 1993 Lincoln Continental for $18,000--$15,000 less than the original sticker price. The vehicle had 15,000 miles on it, with 35,000 miles still under manufacturer's warranty.
The new cars he considered cost $3,000 to $7,000 more. "I got more car for less," said Virag, who was looking to save money as he puts two children through college.
Indeed, dealers around the country report brisk sales of late-model used cars. Sport-utility vehicles, minivans, mid-sized sedans loaded with options and luxury cars are among the favorites.
Demand is likely to grow: A recent survey conducted for the Dohring Co., an automotive research firm, found that 62% of consumers said high new-car prices would prompt them to consider buying a used car.
In January at the Greater Los Angeles Auto Show--normally a showcase of new and future models--Lexus, Toyota's luxury division, displayed a used 1992 LS 400. The "certified pre-owned" vehicle carried a sticker price of $33,995--which is $22,635 less than the 1995 model nearby.
The auto makers insist that the nearly new vehicles showing up on dealer lots are not undercutting new-car sales. But analysts counter that they are certain to reduce these sales, just as program cars--those leased to rental companies for as little as six months--did in the late 1980s.
In the past two decades, Norman Wieland bought five new cars. But when he recently went looking for a new set of wheels, the prices jolted him.
