A Used-Car Bubble?

Kelley Blue Book released a statement last week that got a lot of play in the media -- including Ward's. KBB is cautioning dealers to watch their used-vehicle inventory closely because the Cash for clunkers incentive program could create a bubble of inventory prices that could deflate suddenly once the program ends.

You can read our story here: Used-Vehicle Prices Continue to Climb.

I'm not sure I agree with KBB's analysis. There might be a deflation but how severe is the question. Used-car values have been climbing all year, and according to Manheim's Chief Economist Tom Webb, prices should continue their upward trend the next few months.

Still, it's probably wise to not get carried away with adding inventory.