Sourcing enough used-vehicle supply to keep up with the burgeoning demand.

It has arguably been the biggest challenge faced by dealers in the used-vehicle market for quite some time, but the light at the end of the tunnel might not be too far away, according to a recent white paper from the National Automobile Dealers Association.

The “turning point” for supplies of late-model used units is likely to come sometime during the third quarter of next year, NADA said in the “Used Vehicle Supply: Future Outlook and the Impact on Used Vehicle Prices.”

And it could be even sooner for off-lease volumes, in particular.

“NADA forecasts that the supply of late-model units will decline for about another year and a half, and that we will finally reach the turning point in the third quarter of 2013,” the report stated. “That said, due to the structured nature of lease contracts, combined with shorter holding periods, off-lease volume will start to trend upward toward the end of 2012.

“In fact, we’ve already reached the turning point for off-lease units three years old or younger. This trend will provide some relief for dealers searching for clean, certifiable late-model units,” it continued.

As for the rest of this year, units up to five years old are projected to show an 11-percent decrease in supply. Officials noted this decrease is projected despite the “assumption” that increases in new-vehicle sales will lead to more trade-ins. In 2011, supply for the same age group of vehicles dipped 7 percent.

Breaking this year down further, NADA noted: “Retail and lease returns will dive by 12 percent and 22 percent, respectively.”

Auto Remarketing will continue to share insight from NADA and NADA Used Car Guide this week about the used-vehicle supply situation and used pricing in upcoming stories on our website.

KBB Also Looks at Supply

Recent analysis from Kelley Blue Book’s Alec Gutierrez reflects a similar theme on used supply getting better in the near future. Gutierrez is calling for a bounce-back in lease returns filling the auction lanes early next year.

“Supply remains a challenge for dealers, but things appear to be improving overall,” the senior market analyst of automotive insights for Kelley Blue Book’s Kbb.com recently told Auto Remarketing.

“Supply will continue to be light through the remainder of 2012, but as sales and trade-ins increase, things should improve,” he continued. “Beginning in 2013, dealers can expect to see lease volume at auction begin to increase, which will only further alleviate the current shortages still facing dealers.”

Editor’s Note: Stay tuned to the June 1 print edition of Auto Remarketing, which will include the “Turning Up the Volume” feature examining the state of supply in the retail and wholesale arenas of the used-car market in further detail.