George Belcher, account manager and Patrick O’Connor, remarketing regional sales manager for Wheels, led a webinar recently on remarketing trends that fleets should be aware of. The US and Canadian markets have seen an all-time high since the US recession hit, but market conditions will begin changing later this year.
On the economic front, Belcher said that conditions are getting better. Unemployment is still high, but is getting better. Americans are paying off debt and are increasing their personal savings – which is considered a significant early sign of economic improvement. What’s happening might be considered a new norm, as consumers are being more cautious about their expenditures. Americans are driving less and holding their cars longer. The fuel price increase of 2008 greatly affected them. Caution is prevailing for consumers. Used car sales are more viable for them now, and credit is available for loans.
O’Connor said that used vehicle prices have been strong in 2013 – similar to what they were in 2012. Vehicle up to eight years in age have averaged $15,064, which is very similar to last year. Large SUVs and pickups have seen a lift of 8% in prices this year. Increased fuel economy in SUVs is helping strengthen their prices. Hybrid vehicles have been down as fuel prices have recently stayed flat.
Overall, used vehicle volume is expected to go up later this year and prices should soften. Cash for Clunkers had pulled older vehicles from the market, strengthening used vehicle values, and now conditions are changing. For example, 3.5 million vehicles are expected to arrive as lease returns. There was supply disruption in new vehicles after the earthquake and tsunami in Japan, but supply is increasing and the market will adjust accordingly.
As for next year and beyond, Belcher and O’Connor are watching to see what happens with the federal mpg standards increase more for 2016. It’s expected that new vehicle prices will be increasing to adopt the new efficient technology. The used car market might have a natural lift as new cars increase in cost.
