Even though used car demand has dropped compared to a year ago, used car prices remain high.
Just how much has used car demand slowed? Here’s how it breaks down for March 2021 according to CNBC:
- Sales of used cars less than 10 years old were down 27% year over year.
- Sales of “nearly new” cards (aged 1 to 3 years old) were down by 31% compared to last year.
Meanwhile, the average price of used cars during this period skyrocketed 40 percent to $33,653. In fact, used cars in some cases are more expensive than new models.
Why are used prices staying so high despite slowed demand for used cars? The reason for this is that dealers are still faced with low supplies of new cars — and many new car shoppers end up buying used instead of new.
As CNBC reports, “Pre-pandemic, roughly 76% of vehicles would sell for less than $25,000. Now, cars in this price range account for just 35% of inventory. Meanwhile, those priced above $40,000 are 25% of what’s available on dealer lots, compared with 5% in a typical year.”
Not surprisingly, given these high prices, CNBC reports that while the average consumer spent 89 days looking for a new car in March 2021, that figure nearly doubled at 94% to 171 days, indicating that demand is slowing likely due to higher prices.
How Can Dealers Increase Used Sales? Experts Stress the Importance of Digital Retail
While demand is lower in general for used cars, it’s clear that consumers continue to prefer an online shopping experience. Dealerships looking for a competitive edge should be prepared to fulfill shoppers’ digital shopping needs.
“This shift to digital retail is positive for dealers who embrace it,” Alan Haig, automotive retail consultant and president of Haig Partners, told ABC News. “For those that don’t, they will lose customers and be harmed by the trend.”
If you haven’t yet adopted an online retailing experience, make 2022 the year you add this functionality. As you explore a digital retail experience for your business, make sure you offer some of these must-haves:
- Inventory search and wishlist features
- Accurate monthly payment calculator
- Full credit application with the customer’s bank of choice
- Accurate trade-in valuation
Check Back for More 2022 Updates
These are surely unprecedented times in the automotive industry. Continue to check back with us at Carzato for more auto news and trends.