Used-car prices rise, new-car prices fall - so how much is a car really worth?

Manheim, the largest auto auction company in the world, recently announced that used-car prices rose rapidly in the first half of 2009. Manheim's auto-auction index, which fell precipitously at the end of 2008, has jumped by 16.4 percent since January. It's now at a 21-month high.

Analysts cite numerous reasons for this spike: reduced consumer confidence, tight credit, a rise in consumer thrift, even the onset of much-dreaded deflation. But Manheim argues that the most important change is a sharp reduction in new-car sales. With fewer new cars driving off lots, dealers have had fewer trade-ins, which translates into narrower used-car options. Even with the number of repossessed cars steadily rising, the used-car stocks are growing thin.