The shaky economy is still struggling to regain its footing. Getting a loan is tough. Consumers’ decisions are being driven by practicality and affordability. Good for the used-car market? You betcha. One problem though—there aren’t enough used vehicles to go around.

“For the last nine months, it’s been almost impossible to stock enough decent used cars,” said Doug Sprinthall, new-vehicle operations director for Bloomington, Minnesota-based Walser Automotive Group. The 11-dealership company usually keeps a 30- to 45-day supply of used cars, but right now, “we’re running a 25- to 30-day supply, and it costs you some sales because you don’t have enough inventory.”

Throughout the United States, many auto dealers and auctions say they’re running into the same problem. And even when they can find a used car or truck—especially one- to two-year-old, low-mileage vehicles—it can mean paying much higher prices.

Atlanta-based Manheim Consulting chief economist Tom Webb said part of the problem is that fewer people are buying new cars and trucks. According to the National Automobile Dealers Association, 10.4 million new cars were sold nationwide in 2009, down 21.2 percent from 2008.

Higher demand meant the used-car market has fared better, with sales down 3 percent in 2009, to 35.5 million, compared to 2008, according to Webb. But fewer new-car sales also means fewer trade-ins. And when they can’t get trade-ins, more dealers are heading to auto auctions to bid for a used car to put on their lot.

Lyle Friesenhahn, general manager at Wisconsin Auto Auction in Lomira, Wisconsin, said turnout at his auctions is up 20 percent in recent months, to around 240 each week. “We had more people here last week than at any one auction last year,” he said. But, he said, because of lower inventory, about 300 cars per week right now are selling at auction, down about 50 units from last year.

Jeff McLeod, sales manager at the ADESA Atlanta auction, said he has many dealers who typically bring 80 to 110 cars a week to his auction, but these days, it’s down to 45 or 50.

The inventory shortage meant that in January, the auction sold approximately 4,700 cars, when it typically sells around 5,500 in a month.

Of course, when auctions can find cars, selling them isn’t a problem, since dealers know demand exists among buyers, especially as more people get their tax refund this time of year.

“I’ve never seen it like this,” said Art Stahnten of Certified Auto Mall in Howell, New Jersey. “If the car rolls and it can drive on the auction block, someone will buy it.” Stahnten also said he’s noticed dealers traveling farther than ever. At a recent nearby auction, he said, he sold cars to dealers from the Midwest and Southeast who had come in search of used vehicles.

Casey Holyk, assistant general manager at the Manheim Portland auction in Portland, Oregon—where weekly attendance at auctions is up 25 percent, to around 1,000—said dealers are far less picky than before.

“If you have a '96 Honda with 80,000 miles that someone can buy and not finance, the dealers will kill each other over it,” he said. “New-car dealers wouldn’t touch it before.”

Fewer trade-ins aren’t the only problem for the used-car market. Webb said that many rental-car companies have reduced fleet sizes in recent years and are holding on to them longer, resulting in fewer used cars on the market. Companies that would have kept rental vehicles for only up to 30,000 miles are now waiting until 40,000 miles, he said.

Other dealers and industry experts, such as Michael Linn, CEO of Arlington, Texas-based National Independent Auto Dealers Association, say that last summer’s federal Cash for Clunkers program, which provided financial incentives for people to buy new cars, forced dealers to destroy thousands of used cars that were traded in, many of which could have otherwise been resold.

The lack of supply for increasing demand can mean higher prices for dealers, said Kevin Peters of used-car dealer Peters Auto Mall in High Point, North Carolina. For example, if a car’s listed wholesale price in the National Automobile Dealer’s Association guidebook or the Kelley Blue Book is $8,500, competition at auction could push the price up to $10,000. A dealers who pays $10,000 wholesale might price it at $12,000 to make a profit from customers. But a bank might only finance the loan value of $10,000.

Peters said that has meant that unless a customer has a big enough down payment to cover the difference, his dealership has to cut its profit margins in order to sell the car for less and make the sale. As a result, he said his dealership made money for only one quarter last year.

Many dealers at some point simply have to say no. Stahnten, of Certified Auto Mall, said he’s frequently skipping vehicles when they get too pricey. At a recent auction, he said, “I was only able to buy one car, though I was looking to buy three or four, because the prices were too high.”

Webb said it’s likely that the shortage will continue to be an issue into 2010, though it likely won’t get worse. And if new-car sales improve this year, it should help ease the shortage.

The Manheim Used Vehicle Index in recent months also is showing that prices are starting to level off somewhat after months of steady climbs. “It will still be a tough year,” he said. “But there are some signs of improvement.”

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Laura Youngs is a reporter for The Business Journal in Greensboro, North Carolina.