Black Book Predicts Higher Used Supply

By Staff Writer December 02, 2020

 

Black Book projects a higher-than-expected used vehicle supply in the wholesale marketplace for the rest of 2020 due to several factors: delayed lease returns resulting from lease extensions offered by OEMs – more than 560,000 additional three-year-old units in the second half of 2020; extensive de-fleeting by rental car companies due to lack of consumer and business traveler demand, and financial pressure to raise cash – at least 250,000 additional one- to two-year-old vehicles were added to the market in the second part of 2020; and increased repossessions due to deteriorating economic conditions in addition to delayed repossessions during spring and summer months.

Black Book expects the volume of repossessed vehicles to at least double in the next six months compared to last year. This additional volume could exceed 1 million additional units in the next 6 months.

Black Book projects at least 560,000 additional lease units in the second part of 2020 (compared to the pre-COVID-19 estimates) due to a slowdown in sales in April/May, along with expected turn-ins of the lease extensions. So far, a large portion of these units are being kept by grounding dealers and not being sent to the auctions, according to Black Book.

The report stated that because of COVID-19’s hit on travel, rental companies reduced their fleet during the summer and fall months to match lower demand for rentals. This practice led to more than 250,000 additional rental units hitting the wholesale market in the second half of 2020. In the longer term (later 2021 - 2023), the drop in rental return volume will benefit the price of newer used units, as supply will be limited.

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Last modified on Friday, 04 December 2020 15:33