As 2018 came to a close, auto industry experts and analysts from across the globe set forth an abundance predictions. We've rounded up some of the more notable used car industry trends and predictions for 2019.
Used Car Industry Trends for 2019
A Bright Forecast For Discerning (and Patient) Buyers
According to an article written by Keith Griffin, automotive journalist and member of the New England Motor Press Association, the forecast for used vehicles looks bright through 2020. In his article written for Thought Co., Griffin says "Sales of used cars are expected to continue rising through 2020 [...] At the same time, used car prices are expected to decline through 2020, which means it's a good time to be a used-car buyer but not great if you're a seller."
Jessica Caldwell, Edmunds executive director of industry analysis, was quoted saying "Used vehicles will likely grow in popularity as new-car substitutes if incentives continue to stagnate and interest rates creep up. A large quantity of near-new used vehicles are expected to come into the market that will undoubtedly offer a compelling value message that resonates with discerning new-car shoppers."
While Griffin paints a generally good forecast for the used car market, his parting advice for buyers is to wait. "If you're in the market for a used car," he wrote in mid-2018, "Now may not be the time to buy if you feel you can hold off a year or two, when you'll likely be able to buy the same vehicle for about 10 percent less."
Read the full story here.
Increased Migration to Used Vehicles
At Auto Remarketing, Nick Zulovich focuses on the continuing migration to used vehicles. He traces the migration directly to the growing difference in monthly payments between new and used cars. With a difference of nearly $150, it adds up to $1,800 over the course of a year - a savings substantial enough to make any buyer think twice about buying used.
Also fueling this migration is the increase of quality in the used car market and a customer base that knows what it wants. Cars are being cared for more carefully by owners judging from the inventory many dealerships report, especially from private sellers.
Anil Goyal from Black Book traces it back in large part to leases. "There are many choices of gently used vehicles with exceptional value", he says, "[A]s a result of the rising off-lease volume over the last few years."
At the same time, buyers are much more likely today to have researched the make and models they're interested in before ever stepping foot in a dealership. That homework on their part means they often come into a dealership ready to buy.
It's interesting to note, however, the difference between new and used car buyers' research habits. Zulovich notes "Analysts indicated 33.6 percent of all visitors to Jumpstart partner websites in October researched used makes and models versus 66.4 percent for new. These metrics compare to October 2017 research-activity figures that showed 30.1 percent for used and 69.9 percent for new."
This difference is expected to change, however. As Jumpstart senior analyst Colin Thomas notes, "As prices of new vehicles creep up and incentives continue to shrink, it’s expected that consumers will increasingly research and consider used vehicle choices."
Get the full story here.
Customers Get Comfortable Shopping Online
While many thought buyers wouldn't be comfortable buying a car online, the market has proven otherwise. Over the past few years - and especially within the last 24 months - internet shopping for vehicles has grown by leaps and bounds. This shift has spurred some dealerships to join in with start-ups and offer online shopping as well as car valuations and financing options all through their websites.
In an article for Market Watch, Wall Street Journal author Adrienne Roberts uses the example of Carvana to illustrate this segment's growth. She points out that Carvana sold 230 cars in 2012. By 2017 sales topped 44,000 for the year. By the third quart of 2018, however, Carvana was reporting sales of 66,400 cars with another three months of the year yet to go.
While there are still plenty of challenges to overcome when it comes to selling cars online, there's clearly a market ready for change.
Read her full story on this emerging trend here.
Used vs. New, Cars vs. Trucks and Why Car Manufacturers Care About Used Car Reputation
Wards Auto sat down to talk to Eric Lyman of TrueCar about everything from the new vs. used debate among buyers to why car manufacturers care about the used car market.
Lyman echos what other experts have said when it comes to the improved quality in today's used car market. He says, however, that the quality is so high because car manufacturers want their cars to dominate both new and used markets. "A healthy used-car ecosystem is a powerful tool to drive new-car sales. Brands that struggled to maintain strong used-car values historically also have struggled on the new-car side, either through heavy discounting or lower market share or both."
There's also a clear surge in interest for trucks and utility vehicles. For this, Lyman chalks it up to overall functionality and versatility as well as a slew of improvements the industry has made over the past few years. This newer generation of trucks and utility vehicles feature practical improvements and creature comforts including:
- Higher ride height
- Ease of entry and exit
- Enhanced overall comfort (heated seats, roomier cabins, etc)
- Driver assist enhancements (blind-spot detection, backup cameras, etc.)
- Increased fuel efficiency
With a shift in what people are looking for as well as more discerning buyers willing to research preferred makes and models, it's no wonder that more and more people are opting for used over new.
Read his complete interview here.
Across the board, the message is the same: A market with higher quality customers who know what they want and dealerships ready to meet and engage with customers across multiple platforms. No matter which way you cut it, 2019 looks like it will be one of change.