Consumers could continue gobbling up used small cars this year

Chase Disher has heard the talk about how consumers are “gobbling up light trucks.”

“But our data shows that most small cars and crossovers remain hot items on the used market,” Disher, who is an analyst at Autolist.com, said in a news release.

Disher is referring to a new Autolist study, and the title of the study says it all: “Small cars dominate used market in 2019, trend should continue in 2020.”

Consumers want more than just gas-guzzlers

The study shows compact cars and crossovers from Honda and Toyota dominating the top 10 fastest-selling used vehicles in the United States in 2019.

Autolist expects that trend to continue into 2020.

In an interview with Auto Remarketing, Autolist.com editor in chief David Undercoffler said many of the factors that made small cars popular with used-car buyers in 2019 will continue in 2020.

“I think you’re seeing the number of used cars hitting the used market is starting to dwindle, but demand really is not, so … the level of supply vs. demand in 2019 is actually a little less equal in 2020,” he said.

Undercoffler continued, “Similar demand and fewer vehicles should make a pretty good market, again, just … based on vehicles coming off leases and back into the used market in 2020.”

Autolist said the study’s results “buck the notion” that consumers are only showing interest in gas-guzzling pickups and SUVs.

In fact, Disher said as the supply of used small cars sees a 2020 decline, Autolist expects their time-on-market to continue to shrink because of their continued popularity.

Overall, however, Honda’s Odyssey was the fastest-selling used vehicle in the United States.

Autolist gathered the data for the study by studying more than 4 million used vehicles that left the Autolist marketplace from the six-month period of April to September of 2019. The study only included vehicles from the 2015 to 2018 model years because of the high concentration of the used market found in that timeframe. The analysis excludes vehicles with fewer than 100 miles on them, as well as low-volume specialty models.

The fastest-selling used vehicle, the Odyssey, remained on the market for a median of 24 days. That compares to the national average of 33 days for all used vehicles analyzed.

That quick selling time for the Odyssey also beat the national average for all minivans in its segment, which is also 33 days.

The Toyota RAV4 Hybrid, the Toyota Yaris iA, and Nissan Sentra were close to the Odyssey, with a median of 26 days on the market.

Autolist said the Mercedes-Benz GLS was “the sole outlier in this top-ten list.” That’s because it’s not a Japanese model and because it’s the only large, luxury SUV on the list.

According to Autolist’s data, that vehicle also took a median of 26 days to sell.

The rest of the top-ten fastest sellers — the Honda Civic, Honda Fit, Toyota RAV4 (gas version), Toyota Corolla, and Honda HR-V — all took a median of 27 days to sell nationally.

More on consumers gobbling up small used cars

Autolist expanded on its statement that forecasters are expecting the popularity of small used cars to continue in 2020.

“These cars appeal to those who are downsizing, buyers on a tighter budget, those with tighter credit, younger buyers, first-time car shoppers, or empty-nesters,” Autolist wrote.

Autolist mentioned a trend that it says is keeping prices healthy for smaller cars: The declining volumes of those small cars entering the used market have not been met with an equal decline in demand.

According to J.D. Power, small and midsize cars showed the highest used market price appreciation in 2019.

They also appeal to a wide customer base. Because of that, the popularity of those sedans and hatchbacks is more likely to “weather the light truck storm,” Autolist wrote.

Autolist also noted the slowest-selling used model on the market in 2019: Disher described the Ford EcoSport as “the rare small crossover that struggled to sell in 2019.”  

Others on that unfortunate list include a mix of crossovers and large sedans from Ford/Lincoln, General Motors, Land Rover, and Porsche.

Disher said the EcoSport is “simply outclassed in most respects by almost every one of its subcompact rivals, and that shows up in our sales data.”

Also on Autolist’s slow-selling list: five large American sedans that older buyers have historically favored: Lincoln MKS, Buick LaCrosse, Ford Taurus, Lincoln Continental, and Cadillac CT6.

“Our data shows that while small and/or fuel-efficient cars and crossovers remain popular, large, American luxury and near-luxury sedans are just the opposite,” Disher said.

He continued, “Buyers who have the budgets for these models — even on the used market — are rapidly switching to crossovers and SUVs.”

The Land Rover Discovery, the Buick Regal Sportback, the Land Rover Range Rover Velar, and the Porsche Panamera were the remaining four vehicles on that unfortunate slow-selling list.

But Autolist said not all news is bad for those slow sellers. Although landing on that slow-selling list might seem like a knock against a particular model, shoppers who still prefer one of these vehicles might engage in more aggressive bargaining.

“This relative unpopularity could actually be a benefit for fans of these vehicles, since it means it’s a buyer’s market, and they’re in the driver’s seat when it comes to negotiating,” Disher said.

In his conversation with Auto Remarketing, Undercoffler discussed how in the new-vehicle market, “SUVs, crossovers and light trucks are the hot ticket, and automakers are certainly promoting that because they’re higher-margin vehicles.”

But he believes that ignores a “huge group of buyers, who are primarily in the used market [and] who look to compact cars for a variety of reasons.”

Those buyers might be on a tight budget and have tighter credit. Or, they might be looking for a very low monthly payment or low-cash purchase. They might be younger buyers purchasing their first vehicle.

And then there are the empty nesters, Undercoffler said, who might have driven larger vehicles but whose children might be grown and have left the nest.

“So each of those groups is a pretty large buying cohort on their own, and when you combine all of them together, they’re still a pretty meaningful group of purchasers,” Undercoffler said.

Additional factors: A good selection of used vehicles is still out there for buyers.

Undercoffler said, “The new market, with automakers like Ford and Chevy about to axe their sedans, it’s also causing people to say, ‘Wow, I’ll consider the used market.’ So there’s a lot of variables going on.”  

Fastest-selling vehicles

SOURCE: Autolist.com