Thought this was interesting. As many have been saying there is going to be a collapse in the second hand market, prices are rebounding hard now that dealerships have been deemed essential in in many states. As the automotive market continues to rebound, UCMs will start buying and the market will slowly find it’s way back up. I still find it impressive that despite a complete wholesale shutdown across the board, prices only fell ~ 9%
Now I think it will be interesting to see how the market responds to a lack of new inventory. Countless dealers are reporting extremely strong numbers (some even better than before the pandemic) this past week, so it is inevitable that we will see a large spike in prices from a lack of inventory throughout May / Early Summer.
And for those who don’t know MMR is Manheim Market Report. It compiles auction data and tells a dealer what a vehicle is worth wholesale. The entire wholesale market (including trade-ins) is based on MMR.
Could some of the recent noise on that graph be attributed to very small recent sample sizes, and/or an uneven/unusual mix of vehicle types from one day to the next?
I have had a ton of internet leads to sort through since the Stimulus Checks have landed. I wouldn’t say a high % of them are serious shoppers however my dealership is now slowly starting to bring back salespeople.
No, sample sizes are still in the thousands. Even while crippled the US wholesale market does a very healthy amount of volume (thousands of transactions daily).
Primarily sparked by a growth in sales volume and dealers re-opening.
As @HondaSoCal stated, most dealerships are taking steps toward re-opening (my dealership just increased staff by 3). Were getting more internet leads then we can handle and new car inventory is running low. I don’t believe much has to do with the stimulus check either, even before checks hit we were still doing very impressive numbers given the lockdown.
The biggest reason for the drop was the auctions were closed. Despite what others say on here, I think used cars will go up in value as the economy takes a dive. People will want to spend less on vehicles so they’ll look to used, although people might be so broke they can’t afford anything. Then there’s the cash for clunkers 2.0 rumor too.
So according to some of the “industry” people here, tight credit markets, 40% GDP decline, 20% unemployment, dropping equity prices equals higher new car and used car prices? Buy now or miss out, as some have put it.
I’ll go with my gut on this one and say they will be way wrong.
It’s because of the billions of dollars in auto loan defaults haven’t happened yet, because it’s impossible to default. Just wait til the 3 months of auto loans being put off and then they have a balloon payment to make it up. Oh, and that the ability to repo a car is available again. This is a short term effect of people being bored and having a stimulus check.
If I no sale 70-80 % of what I run to maintain the 95% retention, is the market really holding up? Next sale I’ll have my no sales plus additional maturities. And so on…
The math doesn’t make sense. I am reading headlines like wholesale volume being down 80% and used car sales down 60% in April so far. If prices are spiking, its wishful thinking on someone’s part to try and prop up the market but I doubt it will be sustainable by the end of Spring or early Summer.
