CARY, N.C. -

The number of vehicles entering the auction market these days is down significantly, and in its Used Market Update released Thursday, J.D. Power explains why.

There were approximately 79,000 wholesale auction sales of vehicles 8 years old or younger the week ending June 20, according to J.D. Power. That’s a 31% drop from the same week a year ago, the company said.

While that’s steady with the week ending June 13, a J.D. Power chart shows auction sales moving downward for most of the spring and early summer.

The company attributes several causes for the downturn in the number of units coming to auction.

“First, there are fewer off-lease units as more consumers are buying them out due to favorable equity positions,” J.D. Power said in the report.

“Second, there is less daily rental coming back; rental companies sold off large portions of their fleets last year and didn’t purchase replacement units to right size for slowing rental demand,” the company added in the report. “And finally, dealers are hanging onto trade-in units that normally don’t fit their specific needs and retailing as many vehicles as they can.”

A slide in the 2021 Mid-Year Review from Cox Automotive might explain one reason for the latter

Looking at the distribution of retail inventory by price tier, data from vAuto and Cox shows a dramatic reduction in the share commanded by lower-priced used vehicles.

In June 2020, used vehicles in the $10,000 to $15,000 range represented 15% to 20% of retail inventory. It’s now less than 5%.

Likewise, used vehicles in the $15,000 to $20,000 range were at nearly 40% of retail inventory last June. This month, it’s below 30%, according to the vAuto/Cox data.

“Where we see that there was ample supply for more affordable vehicles last year below the $25,000 price point, the mix of supply has shifted for this year,” Cox Automotive industry intelligence analyst Kayla Reynolds said in a conference call discussing the report.

“The retail mix is becoming more constrained, with the lack of more affordable vehicles, because we’re seeing that people are keeping their vehicles longer and withholding what would be the vehicles in those lower price point categories,” she said. “Of course, the increase in prices has also limited the supply of those lower price-point vehicles.”

And to J.D. Power’s point on off-lease volume declines, the latest quarterly report from RVI Analytics indicates there was a 1.8% year-over-year drop in off-lease volume during April, and further softening is expected.

The RVI Lease Supply Index for 2021 is expected to drop 6.5% from 2020.

“Given the low supply of new vehicles as a consequence of the COVID-19 shutdowns and most recently the chip shortage, we are expecting the off-lease supply index to decline over the next year,” the firm said in its report