Friday, Jan. 06, 2017, 03:12 PM UPDATED 10:32 AMBy Chris Hart-Williams
CARY, N.C. -
Used-car sales are predicted to do well in 2017, following what was a record year for used-car sales, according to two automotive industry leaders.
In an AIADA AutoTalk webinar in late December, KAR Auction Services chief economist Tom Kontos and David Lim — vice president and equity analyst at Wells Fargo Securities — discussed last year’s used-car sales and what to expect this year.
“It looks as if the cars that are coming back off lease, as repos, as trade-ins, as off-rental or as off fleet units are all finding a new home in the retail side of the business,” said Kontos. “Used-car sales through November, according to NADA data, for franchise dealers are up 3.6 percent; and for independent dealers, used-car sales are up 6 percent.
“So, the retail sales of used cars, if you combine those, they’re in the 4.2 percent range, which is pretty much exactly the rate of growth in supply (in 2016) at auction.”
Lim also agrees that used vehicles should do well in 2017. He said public auto dealers have been vocal about the opportunity in used vehicles, as many have launched standalone used-car outlets.
“There’s definitely opportunity where you know these franchise dealers are going to get first dibs and in our view, I think having first dibs is actually a benefit for guys that also have standalone stores where they could feed those stores with the inventory,” he said.
Kontos and Lim also touched on the certified pre-owned market.
Dealers have embraced the marketing sales effort it takes to turn consumers on to CPOs.
“CPO sales they’ve been several years in a row, breaking their prior year record as consumers become more aware of the CPO as an alternative to new or used,” said Kontos. “This year, through November were already a 2.41 and that’s a 3.6 percent year to date increase. It looks like with December's numbers we’ll break that 2.55 and get closer to 2.6 to 2.65 for the year and have a new record on CPO sales.”
Of course, that's exactly what ended up happening. Autodata Corp. reported that there were 2.64 million CPO sales in 2016, which was the sixth straight best-ever sum for this rapidly expanding market.
Lim said CPO programs are attractive and bring customers into the fold who can’t afford a brand-new luxury vehicle, but can purchase a CPO and maybe someday down the road buy the brand new version of their CPO vehicle.
“The impression that I have is that (2017) could be a pretty good year for used vehicles,” Lim said.