A Fresh Take on the 2021 Used Car Market

A Fresh Take on the 2021 Used Car Market

Expect to see even more aggressive strategies from the major groups and big box retailers for inventory acquisition. 

by Matthew Davis, CMO of TradePending

A Changing World

The 2021 used car market in one word: weird. The limited supply of new inventory from manufacturers launched an all-out battle for acquiring used cars. Greater demand met limited supply, and used vehicle prices soared.

At the microeconomic level, dealers saw the impact on their bottom line. They tallied record profits last year on fewer vehicle sales.

Pulling focus back to the bigger picture of the last 12 months requires a different approach. Oddly, it’s difficult to find easy-to-digest automotive industry data that doesn’t require a master’s degree in statistics. We’ve got a better way.

The Health of the Used Car Market

We track retail list prices across 25,000 franchise dealer websites every single day. This data forms the backbone of our products, and these visualizations. 

For 2021, there was an inverse relationship between the average selling price of used vehicles and the amount of inventory available to sell. The more prices appreciated, the fewer vehicles entered the market.

At first glance, the average value of a used car listed on a franchise dealer’s website grew from $23.7K in January 2021 to $32.5K in January 2022, a whopping 37% increase. That seems like a great thing!

But watch out! The amount of used vehicles listed on franchise dealer’s websites has been steadily declining since its peak in early summer, dropping 30% from June to December. The pool of available vehicles to acquire and sell was shrinking.

Since January of 2020, used vehicle prices on the top 100 most listed vehicles on dealer’s websites have appreciated 18.3%. The market has appeared to plateau, but it’s anyone’s guess as to how prices will fluctuate this year as news of prolonged chip shortages continue to surface.

The amount of vehicles listed directly correlates to the overall dollar value of the used car market. By summing the listing prices for all of the used vehicles listed during a given period of time, we can gauge the overall financial health of the used car market. While dealers continue to make record profits, the aggregate value of the overall market is shrinking.

The data below shows the used car market peaked in June with $32.6B of used vehicles listed for sale. That market shrunk to $26.2B, a 19.6% decline. The pool of vehicles available for consumers to trade-in is shrinking.

The early 2022 data shows that these trends might be turning around, with more used vehicles being available for sale (stay tuned for that post). 

One thing won’t change. Expect to see even more aggressive strategies from the major groups and big box retailers for inventory acquisition. What’s your plan?

You May Also Like

New Research Reveals Age and Gender Differences in Vehicle Add-On Purchases

Are there certain age/gender demographics with a higher propensity of purchasing any specific set of VPPs? This study sheds light on consumer preferences and priorities when it comes to safeguarding and maintaining vehicles.

study about age and gender differences - man and woman

By Tom Oscherwitz, VP of Legal and Regulatory Advisor at Informed.IQ

When consumers purchase cars at an auto dealer, they often buy supplemental products and services called voluntary protection products (VPPs). These provide additional coverage and protection for certain vehicle components or services not covered by or beyond the manufacturer's original warranty. 

How Generative AI Is Impacting Auto Lending Compliance

What is often left out of recent headlines, is the extraordinary power of AI to reduce harm, including fair lending and discrimination risks.

5 Predictions for Front-Line Chat Solutions

In the next few years, prepare for a chat solution that must act like a personal greeter to every customer who visits your digital showroom.

Maximizing Fleet Uptime: A Dealer’s Guide

This guide provides actionable insights for dealers to ensure their fleets are always on the move.

Your Service Department’s Undervalued Opportunity: Streamlining RO Stories

Consider how much time repair event stories take to write. Now, multiply that by the number of technicians employed at your dealership and you could easily be wasting hundreds of technician hours every month.

Other Posts

Capstreet-Backed TradePending Acquires Fixed Ops Digital

Fixed Ops and its website service experience platform SPARK work with auto dealerships to create a better online experience for their service customers.

Ways to Save on Credit Card Merchant Transaction Fees

A processor should lessen your workload by handling merchant processing. They should free you up to focus on the customer, while feeling confident that your processing remains compliant and safe.  

How End-of-Year-Sales May Impact Auto Finance Digital Transformation Strategies

We still have a very paper-driven culture but we need to continue to shift focus to digitization to reduce risk and liability.

The ROI of Giving Back

The key place to begin for any type of giving-back initiative is to determine what drives you and inspires you.