We're paying more for new and used cars and trucks this fall.

We don't blame you for wondering why, after a recession drove General Motors and Chrysler into bankruptcy and caused sales of new cars and trucks to plunge from about 17 million a year to fewer than 10 million.

The answer is the big drop in the number of new and used vehicles on the market.

When the recession whacked sales, dealers dramatically reduced the number of new cars and trucks they ordered and car companies closed their assembly plants for weeks at a time.

Then along came cash for clunkers, the wildly successful government program that paid up to $4,500 for older, fuel-thirsty vehicles that were traded in for newer, more fuel-efficient cars and trucks.

As a result, only 1.4 million new cars and trucks were available for sale as of Sept. 1, down about 50% from September 2008.

That's left most dealerships with acres of empty lots and no reason to dicker over the few models left in their depleted inventories.

Even though new-car sales are down 27% so far this year, auto industry Web site Edmunds.com says the average transaction price is up about 2% over last year.

General Motors brands, including Buick (9%), Chevrolet (7%) and GMC (6%), are seeing a more significant increase in their average transaction price than the industry average.

Only a few have seen transaction prices drop, although that list includes Toyota (-0.5%) and Lexus (-4%).

You'll also find there are fewer, and less lucrative rebates, available as well.

Edmunds reports that the average incentive -- the cost of a rebate or discount loan -- for the top seven automakers was $2,557 per vehicle in September -- up $83 from August but still well below this time last fall.

(Those discounts are not included in calculating average transaction prices.)

The story is much the same for used vehicles -- inventories are razor thin.

A source for Automotive News estimated that as many as 5 million fewer used vehicles will find their way into the marketplace this year than last. There are four major reasons:

• Weak new-car sales reduces the number of trade-ins.
• 700,000 cars and trucks traded in as part of the cash-for-clunkers program had to be crushed.
• Rental car companies are keeping their vehicles longer.
• Fewer leased cars and trucks are scheduled to be returned.

That drove the average price dealers had to pay for used models at August wholesale auctions up 3.9% over August 2008. And when dealers have to pay more for used cars and trucks, they pass that cost on to consumers.

We spoke with one Chicago-area dealer who had two, almost identical midsize sedans on his lot. Yet he was charging more for the one that was slightly older and had 10,000 more miles on it, because it had cost more than the similar model he had bought the previous month.

More evidence that used-vehicle prices will continue to cost more came in late September when Automotive News reported that the National Automobile Dealers Association was significantly raising the value of many pickups, midsize SUVs, minivans and crossovers in its pricing guide because of the short supply.

The NADA Official Used Car Guide is a key tool used by dealers in determining wholesale values and setting retail prices.

By Russ Heaps

Interest.com Contributing Editor