BANDON, Ore. -

Used-car inventory levels approached 50 days’ supply last month, continuing an upward movement that has offset some of the rise in retail prices for dealers, according to CNW Research.

Supply is expected to hit the 52-days mark in early 2014, but CNW contends this level “is within a comfortable level for solid profits.”

Getting into specifics on pricing, retail used-car transaction prices for franchised dealers (excluding items like taxes, fees and interest rates) are up 2.81 percent year-over-year in December and up 1.26 percent month-over-month.  

Transaction prices for independents have climbed 8.73 percent year-over-year in December and 2.55 percent month-over-month.

CNW president Art Spinella noted that the transaction prices franchised dealers are fetching now still significantly trails the March-April-May peak. However, he has spotted a overall firm retail price picture this month, for franchised and independent dealers alike.

“While wholesale and auction prices remain extremely soft for most used-car segments, the retail prices are firming up — at least in December,” he said.

As far as days’ supply, the November level was estimated at 49.76 and it appears to only be going up.

“Countering these (retail transaction price) gains are increases in used-vehicle days’ supply, which could pressure dealers to move inventory faster by lowering prices or at least being more flexible on asking prices and trade ins,” Spinella said.

Offering more context, he added: “Two counter-balancing trends here: more demand and larger on-lot inventories. It is likely days’ supply will reach 52 days by early next year, which is within a comfortable level for solid profits.”
 

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.