Car prices are up and will remain high all summer

Car hoods lined up

If you are car shopping, expect to pay more -- at least for the next six months or so.

It doesn't matter if you want to buy new or used, supplies are down and prices are up.

The earthquake and tsunami in Japan disrupted part production and vehicle assembly there, creating parts shortages and slowing vehicle production here.

More buyers are chasing after fewer cars and trucks.

Plus, carmakers are facing higher costs for energy and raw materials, and passing those costs along to you.

What this adds up to for new-car shoppers is that new-car dealers are less likely to wheel and deal.

It also means that not only are manufacturers increasing sticker prices, but those manufacturer incentives and rebates that save you even more money are disappearing.

Bottom line: Buyers are paying more for the same new car today than they did just 30 days ago.

Higher new-car prices are pushing more car shoppers into the used-car market creating more used-car demand.

Dealers are also trying to make up for dwindling new-car supplies by increasing used-car inventories, pushing up wholesale prices at the auctions.

The loser is the used-car buyer who must pay higher prices.

Manheim, which operates wholesale used-car auctions around the country just reported that the average price dealers are paying for used cars at those sales hit an all-time high last month.

After adjusting for inflation and other key factors, wholesale prices for used cars are up nearly 5% over last year according to Manheim.

This is a trend the experts expect to continue.

If you move quickly, there are still some manufacturer rebates out there on new cars.

Dodge, for example, is offering up to $1,750 on a 2011 Avenger and $1,000 on a 2011 Challenger. You can also get as much as $500 back on just about any 2011 Toyota.

But until new-car inventories return to normal, which some experts say could take until the end of the year, the bargains will be fewer and farther between.

Fortunately, conventional car loans have never cost less. Click here to compare the best auto loan rates from scores of lenders.

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