August 2018

It’s an interesting enigma, the 3-year-old car.

Supply for these vehicles is at record levels, says a report from Edmunds. But that doesn’t appear to have slowed sales.

According to the company’s latest Used Car Report, roughly a fourth of used-car sales at franchised dealerships during the second quarter were 3-year-old rides.

But the average turn rate on these cars during Q2 was 38 days, which Edmunds said was the faster quarterly turn rate in at least 13 years.

Demand and supply, as it turns out, are both strong.

As one might expect, the leasing/off-lease market can often impact this slice of the used-car population. That was particularly evident when it came to the wide spectrum of differences when comparing new-car ATP to prices of the same 3-year-old used cars — both in terms of segment and model comparisons.

In fact, Edmunds found that the price gaps on the segment side were as low as 27 percent for midsize trucks, but as high as 48 percent for luxury midsize cars.

That in and of itself is another paradox, of sorts. 

“With consumer preferences leaning more toward SUVs and trucks, you'd assume that the savings would be more clear-cut, and you could apply a general savings figure based upon overarching SUV, truck and car vehicle categories,” Edmunds said in its report.

“That isn’t the case. The dynamics of 3-year-old used vehicle values are primarily dictated by the supplies afforded to the market from leasing, and within each category, volumes differ,” the report adds. “Specific models that might have been leased in higher volumes compared to their competitors are also a factor.”

Speaking of which, Edmunds looked at the same price gap for the 20 best-selling used cars on the market.

It found a similar gap, with the price difference of 48 percent for a BMW 3 Series at the top of the list and the 29-percent price difference for the Toyota RAV4 at the bottom.

Interestingly enough, the residuals of the RAV4 contributed greatly to the low price gap, despite the vehicle being a “heavily leased” model when new.  But lower residuals led to the opposite happening with the 3 Series, another heavily leased vehicle.

“A vehicle such as the Toyota RAV4 was a best-seller when new, and even though it was heavily leased three years ago, the strong residual values of this vehicle combined with the healthy overall demand in the compact SUV segment don’t allow for significant savings,” Edmunds said.

“On the other end we see that BMW’s 3 Series, a legend in the compact luxury car segment, faces weakened residual values because of high lease volumes in a segment that is no longer seen as the entry point into the luxury market,” analysts added. “But those who regard the 3 Series as the luxury compact sedan to own can realize a wealth of savings.

“Going forward we could expect these new-versus-used dynamics to continue in a predictable manner. However, if tariffs are enacted against specific models, these savings figures are bound to change and are certain to test customer loyalty.”
 

With one executive calling it an “important milestone in our transformation to a mobility company,” Toyota Motor Corp. said it will build autonomous vehicles with Uber in an expansion to their partnership announced Monday, while also reporting a separate $500 million investment in the ride-sharing company.

The two companies said they aim to launch “autonomous ride-sharing as a mobility service at scale.” 

Uber and Toyota will each add their respective technologies to purpose-built Toyotas that will be used in Uber’s ride-sharing network.

The plan is to have third-party autonomous fleet operators (that both Toyota and Uber agree upon) own and operate these mass-produced autonomous cars.

The Toyota Sienna minivan platform will be the basis for the what’s dubbed the “Autono-MaaS” (autonomous mobility-as-a-service) fleet. The vehicles will include Uber’s Autonomous Driving System and Toyota Guardian automated safety support system, with the automaker also using its Mobility Services Platform connected car information infrastructure system.

 The companies have set 2021 as a target date for deploying pilot-scale vehicles on the Uber network.

“Combining efforts with Uber, one of the predominant global ride-sharing and automated driving R&D companies, could further advance future mobility,” Shigeki Tomoyama, who is executive vice president of TMC and the president of Toyota Connected Company, said in a news release.

“This agreement and investment marks an important milestone in our transformation to a mobility company as we help provide a path for safe and secure expansion of mobility services like ride-sharing that includes Toyota vehicles and technologies,” Tomoyama said.

Uber chief executive Dara Khosrowshahi said: "The deal is the first of its kind for Uber, and signals our commitment to bringing world-class technologies to the Uber network.

“Our goal is to deploy the world's safest self-driving cars on the Uber network, and this agreement is another significant step towards making that a reality. Uber's advanced technology and Toyota's commitment to safety and its renowned manufacturing prowess make this partnership a natural fit. I look forward to seeing what our teams accomplish together.”