CARMEL, IN – Lack of retail demand remains the key driver to current wholesale used-vehicle market conditions, according to Tom Kontos, chief economist, ADESA Inc. Retail used-vehicle sales volumes through June are the lowest they have been since 2003 and were down 7.4-percent year-over-year in June alone. This resulted in a year-over-year drop in auction industry same-store sold volume of an estimated 4.6 percent during June.
Average prices fell for the third consecutive month, although they remained up modestly on a year-over-year basis. High gasoline prices, higher interest rates, and other economic concerns continue to negatively affect retail demand, and as a result, dealers have been less aggressive when bidding for vehicles at auction, according to Kontos.
For this situation to change, additional “correction” in used-vehicle prices at both wholesale and retail will likely be necessary. In other words, used-vehicle prices need to soften further before cautious consumers will be enticed to make big-ticket purchases like those involving used cars. This scenario has some likelihood of occurrence later this year as additional supply continues to come into the market from heavy fleet sales in past months, reported Kontos.