If 2022 is the year where the used-car market returns to a stable condition, one of the “first responders” in solving the inventory challenge will be repossession volume.

That’s according to the 2022 Kontos Outlook from KAR Global chief economist Tom Kontos, who broke out the crystal ball and forecasted what he sees in store for the wholesale market, economy and beyond.

Starting with used cars, it's a wholesale market where commercial consignment is hurting, as off-lease units are scooped before making it to auction and rental car comapnies are having to be buyers rather than sellers, as new-car production lags. 

“Repossessions will probably be the 'first responders' to the used-car shortage,” Kontos said in the report.

“Because of government stimulus plus deferrals and forbearance programs that banks and lenders have provided, people were able to postpone or avoid potential repossessions,” he said. “We will possibly now see an uptick in repos as these  are slowly phased out — not back to pre-pandemic levels, but we should see increases.”

Demand for used cars should “stabilize” as new-car inventory begins to normalize. In fact, Kontos has a hunch that by mid-year, chip shortage talk will die down, “as manufacturers use creative new approaches to address this problem,” he said.

Speaking of stability, Kontos is forecasting more of that in wholesale prices, sans the roller-coaster ride.

“We will likely see a return to pre-pandemic seasonal patterns with the usual uptick during tax season in the spring, and a gradual softening the rest of the year,” he said.

When it comes to the economy, Kontos said he’s paying close attention to employment, inflation and the movement in GDP. Regarding inflation, that’s particularly concerning to automotive since it could generate higher interest rates that impacts the affordability of both new and used cars, Kontos said.

And lastly, he shared some thoughts on perhaps the hottest topic in automotive this year, outside of microchips: electric vehicles.

“As we transition to renewables from fossil fuels and electric vehicles from internal combustion engines, it’s going to be costly and will take a while to figure out how we will produce and consume energy in a new way,” Kontos said.

“These things take time and will be expensive in the near term. This is important to keep in mind, as we see more and more electric vehicles entering the car ecosystem.”