Used car prices are falling but likely to recover soon, based on data from a shopping website and the leading auction house that dealers use to buy used vehicles wholesale before retailing them to customers.
Sales of all types of used vehicles collapsed in April as unemployment, widespread auto sales bans and economic and health insecurity ravaged the country.
April used car sales fell 34.4% from 2019, according to Manheim, which runs used car auctions all over the country. The dealer-only auctions allow companies to sell retired fleet vehicles, models coming off lease and vehicles they take in trade to other dealers who think they can sell them.
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Wholesale prices for used cars fell 11.4% in April, but began to recover late in the month, according to Manheim’s figures. The auctioneer’s inventory was up 40% by mid-April. Manheim furloughed more than 6,000 employees because of the slowdown.
Similarly, auto research website iseecars.com reports used cars took longer to sell in March, leading dealers to cut prices on them.
Dealers and auction houses already are trying to manage used-car supplies to support prices, and a shortage of new vehicles following COVID-19 assembly plant shutdowns could boost used prices, so the deals are unlikely to last through the summer. Some sellers at auction have begun setting minimum prices below which they won’t sell a vehicle.
In Detroit, the number of used cars that sold within 30 days on dealer lots fell from 54.1% in February to 44.5% in March, a decrease of 9.6 percentage points, according to iseecars.com, which studied 1.8 million used vehicles listed for sale from Feb. 1 to March 18. The national average decreased 9.8%. Among the 20 largest U.S. metro areas, New York City fared worst: after 49.9% of used cars sold within 30 days in February, just 33.3% found customers that quickly in March.
Interest costs can be a back-breaker for auto dealers, which often finance their inventory purchases with loans. A few extra weeks on the lot can be the difference between a profitable sale and a big loss.
“Overall car sales have plummeted as a result of stay-at-home orders and the economic downturn,” iseecars CEO Phong Ly said. “But for those fortunate enough to be able to make a car purchase, now is an opportune time as dealers increasingly need to move inventory, and these slow-selling models could present great deals.”
Manheim’s wholesale auction figures suggest things only got worse in the first half of April, before beginning to recover.
Wholesale prices for every major vehicle class fell in April, according to Manheim:
- Compact cars: 17.2 percentage points
- Midsize cars: 19.5
- Luxury cars: 3.5
- Pickups: 10.5
- SUVs: 8.8
- Vans: 15.3
The average price for all vehicles Manheim auctioned in April fell 9.2 percentage points.
Some surprisingly popular models lead iseecars’ list of used vehicles that took longer to sell. The biggest decline was for used Tesla 3 electric cars: 71.5% sold in 30 days in February. Just 47.4% did in March, a decline of 24.2 percentage points.
The other used vehicles with the biggest declines in 30-day sales:
- Toyota RAV4 hybrid: 20.9
- Volkswagen Atlas: 19.4
- Mitsubishi Eclipse Cross: 19
- Tesla X: 17.5
- Chevrolet Spark: 17.1
- Toyota RAV4: 16.8
- Toyota CH-R: 16.8
- Lexus GX 460: 16.7
- Honda HR-V: 16.6
For buyers looking for a deal, iseecars crunched the numbers to see which inexpensive cars had the biggest increase in time on the lot, and what their average prices were.
Vehicles with the greatest sales slowdown under $10,000:
- 2012 Honda Civic, averaging $9,120
- 2016 Chevrolet Spark, $9,048
Vehicles with the greatest sales slowdown under $15,000:
- 2015 Honda Civic, averaging $12,812
- 2014 Honda CR-V, $14,709
- 2012 Toyota Highlander, $14,700
Vehicles with the greatest sales slowdown under $20,000:
- 2019 Toyota CH-R, averaging $19,727
- 2019 Honda Civic , $19,404
- 2016 Honda CR-V, $18,178
You can see the full list, and a breakdown of sales slowdowns in the 50 largest U.S. metro areas at here https://ift.tt/2zkDE7M.
Contact Mark Phelan at 1 or mmphelan@freepress.com. Follow him on Twitter @mark_phelan. Read more on autos and sign up for our autos newsletter.
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