- Mar 24, 2020
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Originally published on the TradePending blog here, compiling the data we see from nationwide franchise dealerships.
At the microeconomic level, dealers saw the impact on their bottom line. They tallied record profits last year on fewer vehicle sales.
Pulling focus back to the bigger picture of the last 12 months requires a different approach. Oddly, it’s difficult to find easy-to-digest automotive industry data that doesn’t require a masters degree in statistics. We’ve got a better way.
For 2021, there was an inverse relationship between the average selling price of used vehicles and the amount of inventory available to sell. The more prices appreciated, the fewer vehicles entered the market.
At first glance, the average value of a used car listed on a franchise dealer’s website grew from $23.7K in January 2021 to $32.5K in January 2022, a whopping 37% increase. That seems like a great thing!
But watch out! The amount of used vehicles listed on franchise dealer’s websites has been steadily declining since its peak in early summer, dropping 30% from June to December. The pool of available vehicles to acquire and sell was shrinking.
Since January of 2020, used vehicle prices on the top 100 most listed vehicles on dealer’s websites have appreciated 18.3%. The market has appeared to plateau, but it’s anyone’s guess as to how prices will fluctuate this year as news of prolonged chip shortages continue to surface.
The amount of vehicles listed directly correlates to the overall dollar value of the used car market. By summing the listing prices for all of the used vehicles listed during a given period of time, we can gauge the overall financial health of the used car market. While dealers continue to make record profits, the aggregate value of the overall market is shrinking.
The data below shows the used car market peaked in June with $32.6B of used vehicles listed for sale. That market shrunk to $26.2B, a 19.6% decline. The pool of vehicles available for consumers to trade-in is shrinking.
The early 2022 data shows that these trends might be turning around, with more used vehicles being available for sale (stay tuned for that post).
One thing won’t change. Expect to see even more aggressive strategies from the major groups and big box retailers for inventory acquisition. What’s your plan?
A Changing World
The 2021 used car market in one word: weird. The limited supply of new inventory from manufacturers launched an all-out battle for acquiring used cars. Greater demand met limited supply, and used vehicle prices soared.At the microeconomic level, dealers saw the impact on their bottom line. They tallied record profits last year on fewer vehicle sales.
Pulling focus back to the bigger picture of the last 12 months requires a different approach. Oddly, it’s difficult to find easy-to-digest automotive industry data that doesn’t require a masters degree in statistics. We’ve got a better way.
The Health of the Used Car Market
At TradePending, we track retail list prices across 25,000 franchise dealer websites every single day. This data forms the backbone of our products, and these visualizations.For 2021, there was an inverse relationship between the average selling price of used vehicles and the amount of inventory available to sell. The more prices appreciated, the fewer vehicles entered the market.
At first glance, the average value of a used car listed on a franchise dealer’s website grew from $23.7K in January 2021 to $32.5K in January 2022, a whopping 37% increase. That seems like a great thing!
But watch out! The amount of used vehicles listed on franchise dealer’s websites has been steadily declining since its peak in early summer, dropping 30% from June to December. The pool of available vehicles to acquire and sell was shrinking.
Since January of 2020, used vehicle prices on the top 100 most listed vehicles on dealer’s websites have appreciated 18.3%. The market has appeared to plateau, but it’s anyone’s guess as to how prices will fluctuate this year as news of prolonged chip shortages continue to surface.
The amount of vehicles listed directly correlates to the overall dollar value of the used car market. By summing the listing prices for all of the used vehicles listed during a given period of time, we can gauge the overall financial health of the used car market. While dealers continue to make record profits, the aggregate value of the overall market is shrinking.
The data below shows the used car market peaked in June with $32.6B of used vehicles listed for sale. That market shrunk to $26.2B, a 19.6% decline. The pool of vehicles available for consumers to trade-in is shrinking.
The early 2022 data shows that these trends might be turning around, with more used vehicles being available for sale (stay tuned for that post).
One thing won’t change. Expect to see even more aggressive strategies from the major groups and big box retailers for inventory acquisition. What’s your plan?
