New Vehicle Production Halt Ignites Used Car Demand
As predicted in the early months of the Coronavirus pandemic, New vehicle inventory plummeted when factories were forced to shut down, causing production to come to a halt.
At the start of June 2020, New vehicle inventory was down 1/3 compared to 2019, according to Automotive News. Although this dip in inventory was expected, it is projected to get worse before it gets better. Pickup truck inventory, especially midsize pickups, has been significantly impacted, and the SUV segment is close behind with around a 20% drop in inventory. As a result, dealerships are struggling to meet the needs of New vehicle buyers until inventory recovers. Used vehicles, however, are here to provide relief during an otherwise uncertain time.
During the COVID-19 pandemic, the Used car lot is hot.
With little-to-no New vehicle inventory and pent up demand, where can dealers turn? Used cars.
In June 2020, Used vehicle sales rose 17% above the pre-pandemic forecasts, according to research firm J.D. Power. Despite COVID-19, the Used car industry is faring better than before, providing dealerships with a unique opportunity to build up and sell down their Certified Pre-Owned (CPO) and Used vehicle inventory while New vehicle inventory is low.
Even pre-pandemic—over the past 5 years—the share of consumers opting to purchase nearly-new Used vehicles (0 to 4 years old) versus those purchasing New vehicles has grown 17%, according to Automotive News. To remain relevant during this shift, and into the future, dealerships need a strong Used car selling strategy.
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