by Jon LeSage, editor, Used Car Market Reports
Used car prices have been fluctuating this year in wholesale and retail transactions. Skyrocketing prices that occurred in the first half of 2011 have been bobbing up and down since that time. What are the forecasts for the rest of this year, along with other metrics that shape remarketing profits? Here’s what expert are saying, along with a few trends to track as the year progresses…..
- Supply is increasing, and there’s debate over whether that means prices will be strengthened or weakened. Supply growth is coming from off-lease vehicles, rental return, commercial fleet lease, and more aggressive lending.
- ADESA’s Tom Kontos says that growing wholesale volumes should keep downward pressure on prices.
- Manheim Consulting’s Tom Webb thinks “supply will be excessive relative to demand.”
- As for recent market trends, Webb and has seen wholesale pricing increase in the Manheim Used Vehicle Value Index – that’s coming from low inventories and high transaction prices in new vehicle market, plus strong profit opportunities in the retail used vehicle market.
- In the latest Guidelines, NADA sees used price losses continue to be mild and expects favorable credit conditions to help spur overall demand; prices should rise by 1% this year.
Market drivers to watch through end of year:
- Kontos thinks wholesale volumes will grow and soften prices; it will also increase the availability and selection of used vehicles for dealers.
- Art Spinella and Tom Webb have been reporting on strong sales volume in retail used vehicle sales.
- If prices are softening, dealers are making up for it by increasing volumes; that’s differentiated by local market demand and the diverse vehicle offerings dealers can tap into. So, it’s expected to be a good year for used vehicle profits if the inventory management is done the right way by each market.
