While some trends have fizzled out since the onset of the Covid-19 Pandemic last March, the “Used Car Sales Boom” is not one of them. In fact, the first half of 2021 is projected to be a particularly HOT market that you don’t want to miss out on.
As we inch closer to Spring, usually quite a busy time for car sales, this trend presents a grand opportunity for dealerships to continue to profit off of used car sales–– a wave we could very well ride out to the end of the year, at least.
Further, as we look back on the climb of used car sales towards the end of January 2021, the statistics persist and make this point worthy of our attention.
We can gain some useful insight with inventory numbers provided in Cox Automotive’s recent brief on the very topic, “Franchised dealers started February with 1.47 million used vehicles in inventory for a 43 days’ supply. Used vehicles are turning quickly as franchised dealers started January with 1.51 million available vehicles for a 50 days’ supply. Independent dealers had an available supply of 1.12 million vehicles for a 56-day supply. Similarly, vehicles are turning fast as independent dealers started January with an available supply of 1.16 million vehicles for a 61 days’ supply.” If numbers don’t lie, then we’re undoubtedly seeing that consumer demand is present, leading to question how things are on the supply end of the chain.
Problems with Supply and Demand for CPOVs?
Mixed views weigh in on whether supply will be able to hold up with the evident demand for certified pre-owned vehicles.
As mentioned earlier, Spring is almost here, and with it comes sunshine, and better yet, stimulus money. There is strong projection that this concoction of good weather and extra cash at hand may create a feeding frenzy in the market.
The repossession of delayed trade-ins and lease returns from 2020 may bring an influx of inventory to the market, which may add more “chum” in the water, keeping the consumers buying.
Echoing this statement, Black Book had this to say, “Black Book projects a modest increase in used vehicle supply in the wholesale marketplace in the first half of 2021 due to increased repossessions due to deteriorating economic conditions in addition to delayed repossessions during spring and summer months. This additional volume could exceed half a million additional units in 2021 (compared to a “normal” 2019).”
Sources at J.D. Power also concur with the inkling that the supply of used cars should be less of a problem in the coming year (2021).
Black Book goes on, “––Our survey of lenders and automotive recovery companies suggest that the volume of repossessed vehicles will at least double in the next six months. We expect that there will be substantial challenges at every step of the process as recovery, transportation, and disposal are not fully recovered.”
To this point, they support the idea that supply will not be that big of an issue if things go as planned with repossessions.
Price Projections in the Used Car Sales Market for 2021
With the record high pricing we’ve seen, reaching its peak in December of 2020 at an average price of $22,087, we might see prices break new records come Spring 2021.
The demand will certainly be there, and with slimmer pickings, prices are likely to hike.
“In 2021, used prices are expected to remain near historic levels as pandemic-related macro-economic headwinds remain in place. By year’s end, prices in Q4 2021 are expected to be essentially flat with where prices were in Q4 2020 and will remain higher than pre-virus levels.” Noted J.D. Power in a recent market update.
In post-pandemic times like these, consumers do not have many options to turn to when dealing with public transportation. For now, consumers are wanting to travel by private means of transport, and uncertainty in the future is leading many to choose CPOV.
Consumer’s Preference to Shop Used Cars Online
There is a growing realization that online car buying is the greatest thing since sliced bread.
Millennials and others spend their time online, doing their research to find a good deal (read more on this trend here). Cars are more of a necessity to this generation, as they recognize the liability in ownership of one. Perhaps this holds some importance among the used car trend. Cars, no longer being a status-driven purchase, gives the customer a more honest look at the price.
On the heels of covid, people are doubtfully concerned with status, but more with how to get out of locked down cities, in order to enjoy more freedom.
Want to Capitalize on the Used & CPOV Trend?
If you’d like to see how you can combine the power of Digital Retailing and increased demand for Used & CPOV, book a demo and see what E-SHOP can do for your dealership today.