For all the doom and gloom surrounding the used-car business, several recent indicators show very positive signs.
May’s Manheim Used Vehicle Value reached 127.9, a record high and a 2.8 percent increase from a year ago.
Dealers bought the most vehicles at Manheim for the month of May since 2008.
Cox Automotive economist Jonathan Smoke said consumer demand outpaced the growth in inventory.
“The May index result challenges concerns that increasing wholesale supplies from near peak off-lease volumes and rising rental volumes would lead to rapidly declining used car values,” Smoke said. “Indeed, the opposite appears to be happening. Higher commercial volumes at auction are providing the used vehicle market with quality and choice that offers a compelling value to consumers.”
Consumer demand for used vehicles continues to grow.
A recent study by Autolist finds 38 percent of consumers want to buy their next car used, compared to 34 percent wanting new and 27 percent not sure.
Moreover, 53 percent buyers under 40 want to buy a used car next time around.
The first quarter finance report from Experian Automotive shows more prime consumers are buying used cars.
The average customer credit score for a used vehicle loan rose to 652 in the first quarter from 645 in the first quarter of 2016.
Prime and super-prime risk tiers combined for 47.4 percent market share of used vehicles in the first quarter, up from 43.99 percent in the first quarter of 2016. At the low end of the credit spectrum, subprime and deep-subprime share fell to 31.27 percent from 34.31 percent in the first quarter of 2016.
“The upward shift in used vehicle loan creditworthiness is likely caused by an ample supply of late model used vehicles,” the Experian report states.
“Leasing has been on the rise for the past several years (and is at 31.06 percent of all new vehicle financing today). Many of these leased vehicles have come back to the market as low-mileage used vehicles, perfect for certified pre-owned programs.”
Part of this increase in credit quality comes from tightening at the subprime end of the business.
So far, consumers seem willing to step up and pay more as this happens.
Used-vehicle buyers put down an additional $93 on average in May, an increase of 3.8 percent compared to May of last year. The average loan term, monthly payment and amount financed also rose.
J.D. Byrider recently appointed Craig Peters as CEO, replacing Steve Wedding, who served the company for 25 years.
Wedding will support the transition as an advisor to the J.D. Byrider board of directors.
Most recently serving as chief operations and technology officer of Barclaycard U.S., Peters was responsible for delivering a new technology platform to support the launch of a new consumer lending business while driving efficiencies and improving quality at the company. He brings more than 20 years of leadership experience in consumer finance to J.D. Byrider with a broad base of global experience across operations, collections, risk management and technology.
Peters has successfully transformed many businesses and operations during his tenure at HSBC, Capital One and Barclays.
Public trust in car dealers seems to be on the rise.
Temkin Group’s Trust Ratings report finds that auto dealers had a 14-point increase in public trust according to the research firm’s benchmark.
Mercedes-Benz tied with grocer H-E-B for the tops in the 2017 Temkin Trust Ratings. The ratings are based on a study of 10,000 U.S consumers, looking at 329 companies across 20 industries.
Auto creditors and Navy Federal Credit Union finished third and fourth.
USAA, Navy Federal Credit Union, Advantage Rent-A-Car, Ace Rent A Car, Mercedes-Benz, and credit unions all outperformed their industry averages by 15 points or more.
Black Book’s Used Vehicle Retention Index fell by 0.7 percent in May.
The index now stands at 112.3, down from 113.1 in April. On a 12-month basis, the index has dropped 5.6 percent.
The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on two- to six-year-old used vehicles, as percent of original typically equipped MSRP.
The index showed a decline as car and truck segments saw increased depreciation in May following a strong spring selling season during April. The index saw a slight bump from 113 in March to 113.1 in April.