With two quarters of data accumulated, AutoIMs is gaining more clarity about key industry remarketing and auction trends, according to its latest quarterly report released Aug. 9. One defining mega-trend is low vehicle volume for the foreseeable future.
Among notable increases in the AutoIMS Industry View:
- The conversion rate, or percentage of vehicles sold on a day in which they were offered, rose to 72% in the second quarter compared to 58% in 2Q 2020.
- The average vehicle sale price was $16,096.20 in the second quarter, compared to $13,089.76 in 2Q 2020.
- The average mileage hit 83,546 miles in the second quarter, compared to 71,982 in 2Q 2020.
Major year-over-year differences are beginning to appear, reflecting the unique supply chain challenges faced by the industry alongside the continuing economic recovery.
In addition to the microchip shortage and supply chain issues, the auction industry is seeing a carry over side effect of previous (pre-pandemic) decisions on how many vehicles to make of certain types, said Joe Miller, vice president of client experience at AutoIMS. "Their manufactuing mix is affecting their ability to deliver what consumers want today. New cars ripple out to the used car market and that drives values and demands on used cars," he said.
Three other reasons auctions are seeing lower vehicle volume is rental cars staying in fleets longers, more leased vehicles being bought by the lessor instead of shipped to the wholesale market, and more vehicles sold upstream of auctions, Miller said.
Based on his conversations with AutoIMS clients, Miller said the volume squeeze will remain for about another years, turning up in the second half 2022 and adjusting back to normal levels of a few years ago in 2023.
In the latest report, AutoIMS user activity leveled off after peaking in March 2021, although June saw the biggest number of new users entering the system this year. Key clients continue to use this time of lower volume to focus on projects including workflow enhancements, integration updates, scorecard revisions, system conversions, and more, laying the groundwork for more efficiency when volumes bounce back
Insights on the Repossession Market
Using the Sales Scorecard, Auto IMS analyzed a cross-section of large auto lenders, focusing on the limited repossession volume it saw in the first half of the year.
Here are some key findings from that market segment with comparisons to the entire database (all segments, as captured in the remainder of the Industry View):
- Average sale price: $9,185, almost $6,000 less than the overall average
- Average mileage: 104,705, more than 20,000 miles higher than the overall average
- Average model year: 2013.9, a full year older than the full sample.
- Average auction charges: $366, about $22 less spent per unit than the overall.
- Average days to sell: 43.7,16.5 days longer sale cycle than the overall average.
- Damage estimate (non-salvage volume): $2,768, 58% higher than the overall average.
- Average vehicle grade (non-salvage volume): 2.6
- Conversion rate: 79.8% Higher than the overall average by nearly eight points.
If conversion rate is any indication, demand is high for the older, less-expensive repo segment. It stands to reason that with more involved CRs, fewer of these cars are selling in online-only channels, leading to a longer stay at auction.
Miller also attributed lower repossession supply to lenders that have adopted self-imposed curbs and leniency for borrowers, legally imposed moratoriums on repossessions, and fewer vehicles coming back to market.