What-Ifs Cloud Auto-Sales Predictions
Things are looking better than before, but analysts hedge their forecasts. Meanwhile, the used-car market makes an amazing recovery.
In April, things were looking horrible for the used-car market, more so than new-car business.
Used-vehicle wholesale auction volumes were down 80% for the week ending April 12.
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Dealers were selling down their pre-owned stock, reluctant to replace it.Used-vehicle sales at franchised dealerships declined 61% vs. the pre-virus forecast. That was 7 percentage points worse than new-vehicle sales.
In May, there was “a massive amount of (used-vehicle) supply,” says Jonathan Smoke, chief economist for Cox Automotive.
Today, it is a different story.
“Used-car prices now are at high points,” Smoke says at an outlook session of the Center for Automotive Research’s online Management Briefing Seminars. “It’s unprecedented. We’ve not seen anything like this before.”
From the beginning of the year, wholesale used-car prices are up 12%, retail prices, 5%, he says.
“That’s positive for the new-vehicle market,” Smoke says, because high used-car prices can nudge some consumers to buy new.
Vehicle sales are off compared with last year, but they are recovering from the trough months of March and April. Leasing, which was in worse shape, is getting better, too.
In the spring, automakers gave generous consumer incentives for new-vehicle purchases. But OEMs offered nothing equivalent for leasing, and volume for that dropped dramatically.
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