Things are looking up in the automotive industry, but it’s hard to determine what will happen in the aftermath of statewide closures, and impact the COVID-19 pandemic will have on used car prices both now and in the foreseeable future.
Good News for Car Dealers
Limiting person-to-person contact, aka social distancing, is now widely understood by consumers and businesses alike to be one of the best ways to prevent the spread of COVID-19. While the CDC still recommends that everyone stay at least 6 feet away from each other, states are beginning to reopen. Large and small businesses seem to be reaping the benefits of relaxing guidelines and the lifting of stay-at-home orders.
This means floor traffic is returning – or about to return – to many dealerships across the country, and people might not be as skittish anymore (which could also be a double-edged sword).
Despite widespread closures and many states still enforcing stay-at-home orders, used retail prices seem to be holding strong, with J.D. Power reporting a slight 0.4% decrease, on a weekly basis, as of May 10th. Overall, used retail prices have dropped by 3% since March.
J.D. Power also reports that “direct-to-dealer wholesale prices have been relatively stable, while wholesale auction prices are on a clear path upward.”
The automotive industry is a resilient one, but a full recovery could still be months away.
Full Recovery Up in the Air
While it's apparent that the car market is coming back, a full recovery is up in the air, as we still don’t have a vaccine for the coronavirus. Some countries have opened back up, only to close back down again because they experienced another rise in cases.
This is an extremely volatile situation, and while states are reopening right now, that doesn’t mean they’ll stay open.
While retail used vehicle prices are holding steady for now, used car values are dropping – which likely means retail used prices are also likely to drop. According to Barron’s, the Manheim Used Vehicle Value Index declined 11% in April from March 2020, and, overall, the index is down around 10% year-over-year, which means moving used inventory could become more difficult.
The drop in prices also signals the likelihood that we’re going to see a huge negative equity problem, with buyers hesitant to trade in their current cars until the market at least begins to recover.
Reel In Subprime Leads
If you need to move vehicles and get prospects through the door (virtually or physically) to help move used units, get in touch with us. At Auto Credit Express, we’ve been a provider of subprime leads in the industry for over 20 years, and we haven’t let the pandemic get us down. We’re still up and running, and as an award-winning lead generator, we’re ready to funnel leads to your subprime finance department. Not only do we verify a lead's information and connect them directly to your store, but we also do it all while maintaining social distancing.
Subprime borrowers could be the key to moving those used units off your lot, and you stand to gain lifetime customers, as well. To learn more about how we can help your store get the prospects you need, call us at 888-535-2277 or complete our online contact form.