“We’re not being nearly as aggressive as we were, so our inventories are running a little light from where we’d like them to be,” Walser said. “There’s going to be plenty of inventory here in 60 to 90 days, so we are not getting too silly on acquiring late-model used cars right now.”

David Luther, president of Luther Automotive Group in Golden Valley, Minnesota, said his company’s used-car inventory is down slightly, partly due to tighter management. But prices are making it more difficult to find cars that make sense for the company to put on its lots.

If the dealership has to pay more for used cars, it has to pass that on to consumers. Luther said he’s reluctant to do that because customers are less likely to buy used when prices close in on new-car levels. “There has to be a reasonable amount of savings to buy a pre-owned car. If that gap gets too close, it’s going to be less advantageous for us and for our customers.”

Rising prices haven’t scared away too many customers so far, though, according to Manheim’s Webb. “It really hasn’t hurt dealers that much. They’ve been able pass their higher acquisition costs on to retail buyers.”

Strong sales

The used-car segment in Minnesota has declined from a year ago, but not nearly as much as the new-car segment. Sales of used cars in the state declined 26.2 percent to 103,690 through April, while sales of new cars fell 39.2 percent to 32,637, according to the most recent statistics available from the Minnesota Automobile Dealers Association (MADA).

“New cars have suffered to the benefit of used cars,” MADA Executive Director Scott Lambert said.

Some dealers, however, say their used-car sales could be stronger if they had more cars to sell. “It’s definitely hurting us,” Schmidt said of Morrie’s reduced inventory. “In this market it’s hard to say exactly how much, but I feel like we could be up 20 to 25 percent in the used-car business year-over-year if we had the inventory. As it is, we’re even to down 5 percent, depending on the store.”

New car sales at Morrie’s rose 83 percent during the first half of 2009, thanks largely to “Cash for Clunkers.” Used-car sales, however, were down 2 percent.

For the year, Morrie’s expects total sales to increase by 40 percent. “That’s a good story,” Schmidt said, “but it could be even better with more of that pre-owned business.”