> Sales mostly flat
> New vehicle prices spur more Used vehicle shoppers
> Increased Used inventory means larger depreciation
Much like the year before, 2019’s new and used vehicle market is moving apace. Sales have been decent enough – with no real jumps in profits. However, analysts still warn of the impact of higher vehicle prices on the auto industry in general, which may mean greater margins for used car dealers.
With many in the industry voicing their concerns, there are a few used vehicle trends you should plan for in 2019.
Sales Will Mostly Be Flat
Plenty of organizations are predicting flat sales. Both NADA and other economists expect the new car sales to be lower than 2018’s 17.3 million. Beyond that, according to Automotive News’, David Muller, senior economist at Cox Automotive, Charlie Cox, said:
“We estimate the market to be around 39 million and a half on the used side in total.”
In 2018, used cars saw a slight increase in sales in comparison to the new market. However, this year, they don’t expect the sales to increase by any substantial measure – which would end the 5-year gain the used market had been experiencing.
Increased Vehicle Costs Will Turn Customers To The Used Car Market
As manufacturing prices continue to rise, so will new dealership prices, and therefore use vehicle prices. However, the key difference here is that used vehicles will ultimately be the cheapest option for consumers.
The chief economist at Cox Automotive, Jonathan Smoke said: “The fundamentals remain solid; used-vehicle demand is at a peak. Wholesales supply is now post-peak and starting a gradual decline. The used market is the answer to the affordability challenges in the new market.”
Lease Maturities Will Peak
In 2019 alone, Automotive News’, David Muller, says more than 300,00 vehicles will come off lease in 2019 in comparison to last year. According to Cox, maturities are expected to peak around 4.1 million units– which comes three years after new light-vehicle sales hit a record of 17.6 million.
Executive Vice President and Chief Economist at ADESA Analytical Services, Tom Kontos said: “So With a high percentage of purchases happening upstream, there were comparatively fewer vehicles working their way downstream into physical auctions.” Which assisted in keeping prices from falling fast.
There Will Be Larger Depreciation
Since there will be an increase in supply, there’s an expected increase in the rate of depreciation as well. According to President of Operations at Black Book, Anil Goyal, the rate of depreciation for 2018 was 12.4%. However, he said the rate will go up to 15% in 2019.
There Will Be An Increase Of SUVs In The Market
Companies, such as Ford, are going all in with trucks and SUVs. According to Tom Kontos, “Even if supply growth in total is fairly moderate, the growth in crossovers and SUVs is going to be fairly significant.”
Bottom line: Used vehicle sales will be close to last year’s peak levels, which is good news. Demand will remain steady, partly fueled by higher new car pricing. SUVs and Crossovers continue to dominate consumer interest, and vehicle inventories should generally match their needs.
