AUTO GLUT HITS USED CAR LOTS FLOOD OF TRADE-INS CRATING WORLD OF BARGAINS FOR SHOPPERS.

Byline: Brent Hopkins Staff Writer

A record year for new car sales has put buyers of used cars in the driver's seat, experts say, as hot competition and an unprecedented number of quality trade-ins have made for one of the best markets in history.

The 17.1 million new cars sold last year - spurred by zero-percent financing and other attractive incentives - have flooded used car lots with trade-ins. To avoid a glut, bargains are aplenty, according to industry followers.

``Late-model used vehicles are a better deal than they've ever been,'' said Dennis Galbraith, a senior manager for Agoura Hills-based J.D. Power and Associates. ``Price has been cut due to competition, and quality has gone up dramatically.''

The bargains have created a buyer's market. Kerry Kaatz of Compton found his choice car - a 1994 Infinity Q45 - at Deals on Wheels in Reseda. The Kelley Blue Book, the standard for used car pricing, lists the car at $13,000, but Kaatz paid just under $10,000 Thursday.

``I've been looking around at dealers and independents, and I've seen a lot of stuff below Blue Book,'' he said. ``This is the best (looking) one I've seen yet, and the price was great.''

The trend of bottom-priced used cars is expected to continue throughout the year, according to the National Automobile Dealers Association. New car sales are expected to suffer somewhat this year, as many customers who would normally have bought in 2002 were lured in early by hot incentives.

``Interestingly enough, even though there's a very large (used car) inventory, dealers are really selling the heck out of those vehicles,'' said Jason Altman, an economist for NADA. ``You might see a very good quarter, because they need to move those cars.''

The attractive offerings have affected dealers in a number of ways. At Galpin Motors in North Hills, which Ford considers one of the highest- volume lots in the nation, sales continue briskly.

``It's stronger right now than I remember it in a long time,'' said owner Bert Boeckmann. ``If things continue, we'll have the best January we've ever had.''

Following Sept. 11, Boeckmann said, he braced himself for a drastic cut in business, but was surprised when the market remained robust. So robust, in fact, that used cars are contributing to the bottom line much more strongly than expected.

``I've been amazed,'' he said. ``I anticipated the slowdown would be greater, but we had a great fall. Things have started out quite well, and used car sales are definitely holding it up.''

Smaller, independent dealers have felt the pinch as customers have either opted for the suddenly cheaper new models or shopped to better advertised big lots. Steve Assil, owner of Canoga Park-based Hollywood Motor Corp. saw business plummet 75 percent in recent months, and doesn't expect a full recovery anytime soon.

``The new sales are affecting used car sales a lot more than normal,'' he said. ``We're the ones who burn, the small people trying to make a living.''

It's not a shortage of good cars, he says, just tough competition. The working class clientele who would normally opt for his government-surplus vehicles can now afford a new car previously unattainable. He's tried dropping prices, but without a high volume of sales, this hurts him worse than it would his larger competitors.

``I've tried to boost business with deals, but I don't know,'' he said. ``I'm just keeping my fingers crossed.''

Other small dealers said new car sales were currently hurting them, but they expect things to turn around in coming months as the hoopla subsides. Jerry Demirci manages Aztec Motors in North Hollywood, where business dropped 25 percent. Though his customer base has been hit on both sides, with more affluent shoppers opting for new cars and less well-funded customers holding off until the economy improves, Demirci remains upbeat.

``It's been slow because of the zero-percent financing, but after February, our business always picks up,'' he said. ``It hurt us a little bit, but it's going to come back. I'm not too worried.''

His calm is well-founded, according to NADA's Altman. Dealers sold an estimated 12.8 million used vehicles in 2001, a number he sees holding steady or even improving if the economic picture continues to brighten.

``As the economy gets stronger, that will be a boon,'' Altman said. ``Things could still prove to be very good in 2002 for used car dealers.''

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(color) Steve Assil of Hollywood Motors in Canoga Park saw business at his used car lot plummet 75 percent in recent months after 17.1 million new cars were sold last year - spurred by zero-percent financing and other incentives.

Gene Blevins/Special to the Daily News