Used-car sales are down, prices are up and pre-owned retail inventory continues to expand — slowly but surely.
Cox Automotive chief economist Jonathan Smoke, senior economist Charlie Chesbrough and the Industry Insights team drilled down into these trends on the company's Q3 Industry Insights and Forecast Call on Wednesday.
The team found that …
Down, but not out.
That’s one consensus from two reports in the past week from Cox Automotive examining the general state of affairs in the used-car market.
The pace of used-car sales last month improved from May, but thanks to high interest rates, fuel costs and price tags, actual sales volumes are …
In a different take on the pre-owned car market, TrueCar is expecting used-car sales will soften this month, and is actually seeing listing prices decline.
These would seem to suggest an adjustment in demand.
Specifically, the company predicts there will be
Expect April to finish with a softer used-car sales tally.
Same goes for new cars.
TrueCar released its monthly analysis of car sales Wednesday and said it expects there will be …
Though the numbers are not yet final, the used-car market is likely to have reached 40.9 million sales in 2021, which would be roughly a 10% year-over-year gain, Cox Automotive chief economist Jonathan Smoke said in a conference call Friday.
And the growth for used-car sales involving a dealer is expected to be even better.
Though slower than November, the used-car retail sales market last month was expected to rise 3% year-over-year, according to a late December forecast from TrueCar.
The company was predicting roughly 3 million used-vehicle sales in the final month of 2021, which would represent a 2% month-over-month decline but a 3% gain from December 2020.
And how fast are dealers selling these used vehicles?
Though still far below the spring 2020 turn-time peak of more than 52 days (and early spring 2021 levels north of 42 days), the estimated days-to-turn for used retail sales continues to creep up, according to Tuesday’s weekly Market Insights report from Black Book.
“Days-to-turn for used retail listings slightly increased over the last few months of 2021. Now in 2022, days-to-turn sits just above 38 days,” Black Book said in the report.
The trough was reached this summer, when used-car turn times fell to just above 32 days, the Black Book data shows.
Cox Automotive also touched on the state of the retail vehicle market in the final weeks of 2021 in its latest Auto Market Report video Tuesday from chief economist Jonathan Smoke.
“Using a same-store set of stores selected to represent the country from Dealertrack, we estimate that new and used retail sales modestly gained against 2019 in the final weeks of the year,” Smoke said in the video.
“Even with improving trends, new retail sales for the full month of December were down 33% compared to 2019 and used retail sales were down 24%.”
Elsewhere in the used-car market, though a full-year industry-wide tally was not yet readily available as of this reporting, at least a couple automakers shed some light on how dealers were performing in the certified pre-owned segment of used to close the year.
BMW CPO sales of 23,180 units fell 10.2% in the fourth quarter, but the full-year total of 109,743 certified sales beat year-ago figures by 1.1%.
The MINI brand had certified sales of 1,720 used vehicles in the quarter, a 20.9% decline, but its 10,527 annual CPO sales was a 10.9% improvement.,0
Porsche had a record year for certified sales, moving 30,024 units for a 10% gain. It capped the year with 8,377 CPO sales for Q4, which beat year-ago figures by 18%.
On both a wholesale and retail level, used-vehicle sales have slowed down, and that includes sales of certified pre-owned vehicles, reports from industry observers indicate.
However, it appears the used-car market could still reach the all-time record for CPO sales set in 2019, according to a Cox Automotive analysis of data from Motor Intelligence.
Through 10 months of the year, there have been 2,380,337 certified vehicle sales, a 9% hike compared to the same period of 2020 and a 2% hike from the first 10 months of 2019, Cox said.
“With two months left in 2021, reaching the revised Cox Automotive CPO sales forecast of 2.70 million units — and possibly matching the 2.80 million record-setting 2019 level — remains within reach,” Cox Automotive said in its report.
There were 216,957 CPO sales in October, compared to 233,514 in October 2020 and 228,118 certified sales in September of this year, according to the Cox analysis that cited Motor Intelligence. There were 230,346 certified sales in October 2019.
Overall, there were 2.9 million total used-vehicle sales for October, a 10% year-over-year drop, Cox said. It was down slighlty from September's 3.0 million used sales.
The used-car SAAR for the month was 35.8 million units, compared to 39.9 million in October 2020. In September, the used-car SAAR was also 35.8 million.
“Used-vehicle sales slowed again in October on low inventory, which we expect will persist through the waning months of 2021,” Kayla Reynolds, who is manager of economic and industry insights at Cox Automotive, said in an analysis.
“Despite a slowing of pace, the used-vehicle market has been playing a key role in the recovery of the automotive industry,” Reynolds said.
Looking specifically at sales from dealerships, Cox said there was 1.59 million used retail sales in October. That’s off from 1.7 million in the year-ago period and 1.63 million in September.
Cox estimated the October used-car retail SAAR at 19.6 million, steady with September and off from 21.1 million in October 2020.
On the wholesale side of the market, J.D. Power Valuation Services estimated there were 294,000 units sold at auction last month, down 9% month-over-month and down 22% year-over-year.
Through 10 months of the year, J.D. Power calculated wholesale sales volume to be at 3,379,000 units, a 13% decline from the same period of 2020.
“This figure appears even depressed when compared with 2019, as auction sales are trending between 25% to 30% lower than pre-pandemic levels,” J.D. Power said in an analysis. “Mass market sales are certainly more constrained, currently almost 14% lower than a year ago, which is being amplified by massive reductions in passenger car wholesale volume.
“Premium wholesale sales are faring better, as sales for this sector are relatively flat when compared with the same period a year ago,” it added. “This continues to be a major contributing factor as to why premium prices aren’t up quite as much as mass market.”
There was softness yet again in the retail used-car market last month, as sales and turn times slowed.
Cox Automotive estimates there was a 10% drop in total used-vehicle from October 2020. It calculated the total used-vehicle SAAR at approximately 35.9 million units for October, compared to 39.9 million a year ago and steady with September’s total used-car SAAR.
Looking at the retail used-car SAAR (which only includes sales from dealerships), Cox estimated the October rate at 19.6 million units. While consistent with September’s retail used-car SAAR, that’s off from 21.1 million in October 2020.
Used cars — and new cars, for that matter — were also selling slower last month.
In a recent analysis, iSeeCars.com examined more than 200,000 new- and used-car sale in October. The used cars it analyzed were from the 2016 through 2020 model years.
The average turn time for used cars in the study was 44.7 days, compared to 32.8 days in September. For new cars, the turn-time was 31.7 days, up from 24.6 in September.
“The demand for new and used cars has slowed in October, which is likely the result of increased inventory over September and because elevated car prices may have deterred consumers from buying a car until prices stabilize,” iSeeCars executive analyst Karl Brauer said in the analysis. “Production halts and restricted inventory continue to beset the auto industry, but we did see an incremental improvement this past month.”
Tight used-car supply and a stretch of record wholesale prices are having an impact beyond the auction lanes and other wholesale channels.
They’re also leading to lower retail sales.
According to analysis around Cox Automotive’s Manheim Used Vehicle Value Index, there was an 11.1% decline in total used-car sales last month.
The seasonally adjusted annual rate for total pre-owned sales was 39.0 million, versus 40.0 million in May.
The total used-car SAAR for June 2020 was 43.6 million.
The estimated SAAR for used retail sales (those coming from a dealer) fell from 21.9 million in May to 21.3 million last month.
In June 2020, the retail used SAAR was 23.1 million.
In a separate analysis, TrueCar was projecting late last month that there would be 4.0 million used-car sales in June, steady month-over-month and a 9% year-over-year hike.
