Used-car retail: Signs are a bit mixed right now
Quite often in reporting the weekly ebb-and-flow of the retail used-car market, you can get some mixed results.
Such is the case this week.
The overall auto rebound “lost momentum” the week ending Saturday, Cox Automotive chief economist Jonathan Smoke said in his weekly video report released Tuesday. Still, used-car demand remains strong — certainly higher than new, according to a Data Point report the company released Wednesday.
“Our estimated retail sales using a same-store methodology shows us the recovery lost momentum last week,” Smoke said. “Sales for the seven days ending Saturday were down 5% year-over-year for used and down 26% for new.
“Both sales trends seem to be hitting a ceiling.”
Meantime, the supply of retail used vehicles is hitting the floor.
According to Cox Automotive’s Data Point report from Wednesday, dealers (franchised and independent combined) began this week with a total of 2.18 million unsold used retail vehicles on their lots. During the same week of 2019, they had 2.65 million unsold used retail units.
That means the days’ supply of retail used vehicles was at 31.6 this week, the Cox Automotive report indicated. Normally, it is at 45 days, which is where it was in July 2019 (45.2).
The latest reading is also less than half of retail used days’ supply in April (77.5 days).
“Limited supply in both new and used vehicles is the next hurdle on the path to recovery for automakers and dealers,” Cox Automotive senior economist Charlie Chesbrough said in the Data Point report.
In a Catch-22 for used, though, the report points out that the supply dearth on the new-car side has driven more customers to used.
And in another one, the affordability of used cars during a rough economy has also pushed consumers to pre-owned, the report said.
However, the Cox Automotive analysis of vAuto Available Inventory data indicates that the average listing price of a used vehicle last week ($19,948) climbed almost $500 from where it was last year ($19,496).
Going back to Smoke’s analysis, the report shows that both new- and used-vehicle form submissions on Dealer.com “outperform.” However, momentum stalled there last week.
Offering some overall commentary, Smoke said in the video update: “Inventory is becoming more of a problem in both the new and the used market. And we can’t ignore the downward drift in consumer sentiment that’s been happening across the country, as we’ve seen widespread increases in the COVID-19 cases.
“But we can celebrate that we still have markets that are enjoying year-over-year increases in vehicle sales. There were 61 markets last week that were in that situation, so the declines are not happening everywhere and we can hope that we at least maintain this level of strength as we get into the rest of the month.”
Some additional positive signs were found in the latest reporting from PureCars following the Fourth of July weekend.
According to PureCars data shared via email, dealer ad spending on used cars from June 15 to July 6 was up 69% from the previous month. Total ad spending climbed 71%, with new-car ads up 76% and fixed ops ads up 59%, the data shows.
PureCars also shared the top 10 used model sales patterns for June 15 through July 6 and found the leading performers compared to the prior month were as follows:
1. Ford F-150: +14%
2. Chevy Silverado 1500: +11%
3. Toyota Camry: +31%
4. Ford Escape: +35%
5. Ram 1500: +10%
6. Chevy Equinox: +31%
7. Nissan Altima: +40%
8. Toyota Corolla: 26%
9. Nissan Rogue: +30%
10. Jeep Grand Cherokee: +25%