Kontos: Retail Used, CPO Sales Remain Soft

By Staff Writer August 05, 2022

Wholesale used vehicle prices in June were down from their spring/tax-refund seasonal peaks, but they remain near their historical highs, according to KAR Global Chief Economist Tom Kontos.

Tight supplies continue to largely offset dampening demand, reported Kontos in his Kontos Kommentary.

Retail used vehicle and CPO sales have been soft throughout the first half of 2022, as inflation-conscious shoppers refrain from purchasing vehicles at historically high prices.

According to ADESA US Analytical Services’ monthly analysis of auction industry used vehicle prices by vehicle model class, wholesale prices in June averaged $17,014 – down 2.2% compared to May, but up 16.1% relative to June 2021, and up 48.2% versus pre-pandemic/June 2019.

Wholesale prices rose even faster for “late-model” used vehicles during 2021 than they did for used vehicles in general, Kontos reported. This is largely due to the impacts of the chip shortage that limited new vehicle production and necessitated substitution of late model used vehicles for franchised dealer inventory sourcing. Also, Kontos notes that prices in 2021 rose rapidly not only during the traditional Spring/Tax-Refund season, but also a second time in the Fall, as rental companies bid aggressively for used vehicles – again because the chip shortage limited new vehicle availability. The impact of the chip shortage has waned somewhat in 2022. Prices did rise during the Spring, but the “bounce” was not as pronounced and prolonged as last year. Nevertheless, wholesale prices remain near historically high levels.

“The softening market trends are not surprising in light of greater consumer awareness of the high price of vehicles these days,” Kontos stated. “For many months I have been stressing that consumers had become increasingly aware of high vehicle prices for new and used vehicles and were starting to push back by voting with their wallets via abstaining from buying. I felt that supply constraints were becoming less important than declines in demand in explaining softening new and used vehicle sales.”

Rate this item
(0 votes)
Last modified on Wednesday, 10 August 2022 12:49