The State of the Used Car Industry in 2020
In his Key Industry Trends for 2020 address, Cox Automotive Chief Economist Jonathan Smoke made several predictions about how used car sales can be expected to trend in the coming year.
- Used car sales are expected to increase 2% in 2020 – With many consumers choosing used cars over new cars because of affordability, dealerships have an opportunity to focus on their used car programs to help boost their profits.
- Used vehicle prices are expected to be stable – Dealerships can take this trend into account for their planning and strategy for the coming year.
- 5- to 8-year-old vehicles will be driving growth in 2020 – Car buyers looking for affordable alternatives are expected to focus primarily on 2012 to 2015 vehicles.
Key Used Inventory Supply Considerations
With used cars playing an important role in your dealership’s sales strategy in the coming year, quickly turning inventory brought in on trade will be vital to a healthy cash flow and profitability. There are several common issues that can jeopardize your dealership’s speed and efficiency when it comes to payoff, title release, and resale or auction, including:
- Payoff surprises – If you’re taking in many trade-in vehicles that fall in that 5- to 8-year-old sweet spot, much of the title data may be close to that age range as well, with a strong probability of old addresses and former spouses represented. A technology solution that allows you to view title details before you accept vehicles on trade can help avoid unexpected situations that may derail your resale plans.
- Accumulating holding costs – Data from auction leader Manheim indicates that overhead costs for keeping unsold vehicles on your lot average $32 per day, per vehicle – which can add up significantly across your entire inventory. When you consider that the average industry timeframe for the vehicle title release and payoff process is 18 or more days (as determined by Dealertrack data), it’s clear that a quicker turnaround can result in notable cost savings.
- Resale and auction delays – You can’t sell what you don’t own, so until you have a clear title in hand, turning a trade-in is a risky proposition. At auction, a vehicle is 50% more likely to sell on first pass with the title available. If you’re planning to retail a vehicle you’ve taken in on trade before you get the title, you could start reconditioning and listing it, but what if it doesn’t go as smoothly as you’d hoped?
Dealertrack’s Accelerated Title solution can address these issues. With a growing network of lenders active on Accelerated Title, you gain increased title visibility, faster payoff and lien and title release.
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