REDWOOD CITY, Calif. -
Used-vehicle values are expected to remain robust next year thanks to supply shortage and a rather healthy used market, according to Nagi Palle, OPENLANE’s vice president of analytics.This was just one of trends that Palle is predicting for next year.
He  touched upon a wide array of topics, including the new-vehicle market, leasing, auctions and customer retention.
“Fallout from the lack of vehicle leasing over the past two years will result in tight off-lease used-vehicle supply, but this, coupled with a strong used car market, will keep used-vehicle values high,” Palle suggested.
“Off-lease trends will be offset in part by other industry segments, such as dealer consigned, that are showing good traction and providing additional used vehicle supply to meet demand,” he continued. “Dealer-consigned units are expected to grow with growth in new-vehicle sales.”
Helping to spur the hike in retail new-vehicle demand here and in Canada will be the U.S. economy continuing to mend, Palle pointed out. This economic rebound is also likely to push up new-lease originations, as well.
Leasing, of course, took a nosedive in 2009 and has shown a major recovery this year. Palle said the impact of the leasing slowdown on used supply likely won’t last much longer.
“Leasing trends will be cyclical and should only affect the used vehicle supply throughout 2011 and 2012,” Palle shared. “A significant upswing in new leases throughout 2010 will lead to an increase in off-lease volume in late 2012 and beyond.
“Lease penetration appears to be headed back to long term historical averages, and with growth in new-car sales, the number of lease originations are also expected to grow,” Palle continued.
Continuing on, Palle delved a bit further into the impact of vehicle supply limitations.
Dealers will have to buy units as soon as they can, in accordance with shoppers’ needs, he noted. 
Palle urged dealers to be “disciplined” in managing their businesses. However, he expressed that dealers need to be nimble in making adjustments.
He went on to emphasize the need for investment by dealers, where appropriate.
Thanks to online technology, speculative buying will remain on a downward slope. Palle also suggested that online technology will help boost vehicle turn rates as well.
Next up, he looked at customer service, which he believes will remain vital for dealers as they try to hold on to customers. Moreover, he suggested that customer service will still be a way dealers can distinguish themselves.
“Focusing on the customer — as well as looking for ways to do business in a more timely and efficient manner — will help dealers continue to survive and thrive during the recovery,” Palle shared.
Finally, Palle shared some of his projections for the auction market. Specifically, he predicts further expansion in the online arena, as well as growth in a few other key areas.
“Online auctions will continue to grow as adoption of the online channel by dealers and partners throughout the automotive industry becomes mainstream due to the significant time and cost savings the industry realizes from conducting sales online,” he predicted.
“The recovery and independent auction sectors and dealers-consigned vehicles will continue to grow as additional inventory sources for online auctions,” Palle continued. “Vehicles from alternate sources will continue to be a great source of inventory and will help fill the gap left by off-lease vehicles over the past two years.”