A record 9.7 million vehicles will likely be sold at auction this year, with 10 million sales expected next year, according to National Auto Auction Association chief economist Ira Silver.
The previous record (9.6 million) was set in 2004.
“What’s the major driver there is the commercial consignment,” Silver said during a webinar Thursday. “Because dealer consignment growth is slowing down, because new-vehicle sales are slowing down.”
However, commercial consignment growth is still moving higher, he said, because it tends to follow new-vehicle sales trends from prior years — which, in this case, were stronger.
Dealer consignment, meanwhile, more immediately reflects the new-car sales environment.
And current new-car sales are “topping out,” though not “collapsing,” he said.
“Past strength in light-vehicle sales support continued growth in total auction volume. And that’s commercial consignment,” Silver said. “So, for the next couple of years, we’re going to have volume growth out there. That’s pretty much no matter what happens to new auto sales.”
Dealer consignment may decline, he said, but it won’t be enough to counteract the impact from volume-heavy commercial consignment.
“Those cars are out there,” he said, referring to commercial consignment. “They’ve got to come back sooner or later — and they will. And there’s enough of them out there to offset the small decline in dealer consignment that I expect.”
As for current numbers, auction volume this year is outpacing 2015 by 11 percent and is at a record high, according to Kelley Blue Book. But there was a bit of a sequential slowdown in the second quarter, the company said in a news release accompanying its latest Blue Book Market Report.
“Despite what we know about the increase in lease returns for the foreseeable future, it’s interesting to note that Kelley Blue Book Field Analysts are seeing a decrease in auction inventory from last quarter,” KBB analyst Sean Foyil said in the news release.
“While year-over-year auction volume is up 11 percent, in the second quarter, we saw a 2-percent decrease in the number of vehicles running through auction lanes from the first quarter of 2016. With auction volume at an all-time high for 2016, it is unusual that the overall average decline in auction values matched last year’s pace,” he said. “Vehicle values decrease when the market is oversaturated, so this indicates that automakers and rental companies may not be sending all of their off-lease vehicles to auction in an effort to keep values stable.”