Wholesale vehicle supply to improve, but remain below 2019 peak
It doesn’t look like the wholesale auto market is getting back to the apex of supply any time soon.
In 2020, wholesale volumes fell 1.8 million units from their peak a year earlier, according to a quarterly report from Cox Automotive, which attributed the slowdown to a trio of pandemic-spurred trends: slow retail sales, the lowest repo rates on record and the soft rental car market.
The inflow of 15.1 million units to wholesale channels last year marked an 11% year-over-year drop, but that should tick up the next two years, yet still not reach 2019 levels.
Wholesale supply is projected to reach 15.7 million units in 2021 and improve again in 2022, reaching 16.3 million units, before taking a tumble in 2023 to 15.8 million units, the Cox data shows.
“2019 was the peak year for wholesale supply. And while we will see improvement in ’21 and ’22, we still won’t get back to 2019 levels as off-rental, off-lease and repo remain below 2019 levels,” Cox Automotive Jonathan Smoke said in an online presentation. “Then in 2023, the market will see off-lease fall by 18% as the declines in leases in 2020 comes home.
“The good news is that stronger retail sales is causing dealer consignments and dealer-to-dealer volumes to grow even more strongly than we originally expected,” he said.
Cox Automotive expects dealer consignment to grow in each of the next three years, after falling from 8.7 million in 2019 to 7.8 million in 2020.
It is projecting dealer consignment will bounce back to 8.5 million units this year, then reach 8.8 million in 2022 and 8.9 million in 2023.
Meantime, off-lease volume will remain steady this year and next at 4.0 million, before dropping to 3.3 million in 2023.
Repo volume, which fell from 1.7 million units to 1.3 million a year ago, is expected to climb back to 1.6 million this year.
Rental risk volumes remain tight. Cox forecasts them to drop again this year, falling from 1.4 million in 2020 to 1.2 million in 2021. There were 1.7 million rental risk units in the wholesale market in 2019.
In a more granular look at wholesale volume, the latest Used Market Update from J.D. Power shows weekly trending in wholesale auction sales.
For the week ending April 11, there were about 91,000 sales of wholesale units up to 8 years in age, the firm reported.
That’s up from the 90,000 sales the week of April 4. However, the last two full weeks of March had an average of 94,000 auction sales per week.
“While week-over-week sales are relatively consistent, sales continue to run approximately 20% to 30% below prior year’s levels and last week’s result continues to emphasize how lean the wholesale marketplace is running, which is helping keep used prices strong,” J.D. Power said in the analysis.