By on June 15, 2020

After coronavirus lockdowns wiped out vehicle production for a few months, dealer inventories are going to have to wait a little longer than normal to be resupplied with new product. Meanwhile, the used market has become awash with cars offloaded by rental agencies with no use for them — except as a way to drum up cash during a difficult time.

Chuck in every American citizen getting free money from the government and you’ve got yourself the perfect storm. Average folks are thinking about using that money on a new car and dealers need to offset depleted inventories and delayed deliveries by scooping up used ones for the purpose of flipping. That’s driven up prices, which could potentially work in your favor if you happen to have an automobile you no longer have much use for. 

If you track used vehicle pricing on the regular, you may have already noticed that secondhand truck prices have gone up. Suppressed for ages by a strong new-vehicle market, North America’s favorite body style didn’t change as factories stopped building new examples. Dealers are struggling to pad out their inventories, making trucks a particularly hot commodity.

But increased demand hasn’t been exclusive to trucks. Dealers are willing to buy up practically anything they think they can turn a profit on. Citing figures from J.D. Power, Automotive News reported that wholesale prices rose 16 percent over the 7 weeks ending on June 7th — or roughly 4 percent above the pre-virus forecast:

According to Cox Automotive, wholesale prices rose 2.1 percent for the week of June 1, while retail prices climbed 0.5 percent, squeezing margins for dealers. As of June 6, wholesale prices were down just 0.6 percent from the beginning of the year, while retail prices were off 1.1 percent.

“So the big disconnect between retail and wholesale prices is gone,” Cox Automotive Chief Economist Jonathan Smoke said in a market update last week.

The used-vehicle market is reflecting, in part, the tight supply of new vehicles, especially pickups, after manufacturers lost about two months of production in North America. That shortage has sent more new-truck shoppers picking from the used-vehicle lot, tilting the balance of supply and demand.

The situation is fluid, however. Factories the world over have been running for a few weeks now and, despite supply chain bottlenecks guaranteed to slow things down for quite some time, new product is coming. Meanwhile, more secondhand vehicles will continue to arrive in large numbers as the year progresses. Forced into bankruptcy by the pandemic, Hertz is dumping its inventory onto the market at discounted rates. This will continue, joined by other rental agencies looking to cut costs during a bad phase or simply swap old stock for new. Auction houses are also gearing up for a restart after furloughing thousands of workers.

That’s likely to take already elevated used vehicle pricing and spike it squarely into the pavement. Our mystery influencer is the presumed economic recession. If global finances remain in a relatively healthy place, we’re likely to see pricing go back to what we saw long before COVID-19 migrated out of China. However, if high unemployment levels are anything to gauge the future by, there’s a strong chance dealers will cut wild deals on just about everything just to make a sale.

Don’t expect it to be like our last recession, however. Unlike what happened in 2007, fuel prices are impressively low and unlikely to make any individual segment a liability. Loan approvals are also pretty easy to get (for now) and the industry is offering deals that would appeal to cash-strapped buyers. Assuming the situation doesn’t move south in a hurry (e.g. another round of months-long lockdowns), the industry can probably avoid sacrificing lines of credit to make up the difference.

We know — that’s speculative to a point where the info provided is borderline useless past the coming month, yet that’s kind of where we’re at right now. Above-averaged used pricing isn’t likely to last much longer, but secondhand autos may still look very appetizing if employment levels don’t bounce back swiftly and new vehicles become harder to wrangle if your credit score leaves something to be desired.

Black Book expects used vehicle sums to fall 15 percent below pre-COVID-19 projections this summer before recovering next year. J.D. Power, on the other hand, predicts a more normal depreciation, with wholesale valuations dropping between 2-4 percent by year’s end against the mostly flat projections that existed before the pandemic.

[Image: David Touchtone/Shutterstock]

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43 Comments on “Now Might Be a Good Time to Sell Your Car...”


  • avatar
    Lie2me

    Around where I am used car prices are WAY down. I have found a couple of sweet deals locally that are very tempting. The problem is my current car still looks and runs perfectly fine and I just can’t bring myself to buy something just because it’s newer

    But, if anything goes wrong with what I’ve got, I’m ready :)

    • 0 avatar

      Around me (Connecticut) it’s mixed at the moment. What was bought at auction 2 weeks to a month ago is still priced aggressively (but not super aggressive) but the new listings are much higher. Also in negotiations with a few dealers over the past 2 weeks I got very little movement compared to 4 months ago. They all seemed pretty sure prices are going up. As one noted to me over the weekend he normally has over a 100 used cars on the lot today he has 40.

    • 0 avatar
      Daniel J

      We just traded in our CX-5 and yeah, trade in values and used car prices are down. Early march when we kinda had started looking, our CX-5 was averaging about 1000 more for trade in and looking just at prices across the state, were running about 2K more than they were when we traded in our car a few weeks ago. I realize that used car prices can shift somewhat quickly, but just looking today at prices, I don’t see them any higher and if anything, they’ve fallen slightly.

      This maybe specifically regional but I’ve noticed here that people will buy new over gently used, and that there really isn’t much worth buying thats more than 5 years old for most buyers outside of those with poor credit or young looking for their first car.

  • avatar

    Bought a used car on Saturday. Noticed the trend is going up quick. I have been really wrong about used car prices over the last 3 months and needed another family ride. So figured I should at least buy before I’m stuck buying with super high prices a month from now.

    Also wholesale auctions being open is somehow driving up prices so far. Now that dealers can see who their bidding against it’s somehow making them go alot higher. So While I’m really hoping for used prices to correct (even if I did just buy one) I have my doubts.

  • avatar
    Carrera

    I looked at Hertz prices…nothing to write home about..at least not for SUVs or pick up trucks. Same prices as everywhere else.

    • 0 avatar
      indi500fan

      I think they understand the market which is somewhat fueled by cheap gas. Read that the Hyundai/Kia/Nissan sedans, 2-3 yrs old, high miles, are bargain priced 1500 below expected but that’s a pretty unloved group anyway.

    • 0 avatar
      28-Cars-Later

      Hertz is trying to retail you on wholesale product, because they know they take a hit on “rentals” from the block which is where the inventory they don’t retail will go. Hertz would be smart to shift as much as they could into the hot wholesale market before it fizzles out because the increased demand may make up for the “rental discount”.

  • avatar
    el scotto

    Oh may our esteemed editorial staff ask 28carslater to comment on this.

    • 0 avatar
      28-Cars-Later

      You have to say my name three times in a mirror at midnight for me to appear.

    • 0 avatar
      28-Cars-Later

      Seriously though, aside from a few weeks ago I haven’t had my eyes in MMR or on the car world at all. However I will comment that I don’t believe J.D. Power at all but am inclined to believe Cox Automotive’s figures of

      “According to Cox Automotive, wholesale prices rose 2.1 percent for the week of June 1, while retail prices climbed 0.5 percent, squeezing margins for dealers.”

      and surprisingly this:

      ” As of June 6, wholesale prices were down just 0.6 percent from the beginning of the year, while retail prices were off 1.1 percent.”

      However it is not noted by AN:

      “Strong Rebound in Wholesale Prices After Historic Fall in April

      Wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 8.96% month-over-month in May. This brought the Manheim Used Vehicle Value Index to 137.0, a 1.9% decrease from a year ago.”

      https://publish.manheim.com/en/services/consulting/used-vehicle-value-index.html

      Because as ZeroHedge noted:

      “Research firm Manheim has indicated that wholesale prices dropped as much as 11% in April, but also that this price drop hasn’t fully hit the retail market yet. The report predicts that since “dealers have largely avoided purchasing new inventory in recent weeks, they aren’t in a rush to cut prices as a way to move their existing inventory.””

      https://www.zerohedge.com/personal-finance/where-used-car-prices-are-crashing-most-us

      So I don’t really believe wholesale took an *11% dive* and then rebounded plus 5% as espoused by J.D. Power in… seven weeks? Funny math, fake news, or both on that one.

      Because the auctions closed and depending on the state dealers may not have been able to transact at all, wholesale did take a dive. On paper, millions to tens of millions were lost ****as they should be because the everything bubble has been overvalued since 2014 which I warned about as recently as last year****. So everyone starts trading again and suddenly a rebound, but what is odd is this is happening when many states are just allowing dealers to come back online. So is it just demand?

      Per Autoblog:

      “Toyota said overall U.S. sales fell about 26% in May, but retail demand rebounded to 86% of levels in May 2019, exceeding the company’s forecasts. Retail sales almost doubled from April to May, a spokesman said.”

      https://www.autoblog.com/2020/06/02/may-2020-us-auto-sales/

      Perhaps, but:

      “Retail sales fell 6.1% on a year-on-year basis in May. Even with May’s surge, sales were still about 8% below their February level, leaving consumer spending and the economy on track for their biggest contraction in the second quarter since the Great Depression. The economy slipped into recession in February.”

      https://www.reuters.com/article/us-usa-economy/us-expected-to-report-record-rise-in-monthly-retail-sales-idUSKBN23N0LE

      So, everything is not awesome.

      Using this citation from ZeroHedge: “The report predicts that since “dealers have largely avoided purchasing new inventory in recent weeks, they aren’t in a rush to cut prices as a way to move their existing inventory”, my read is this:

      Auctions closed, paper valuations dropped, and everyone did the Home Alone face. Things started to open back up and some [dumb] dealers repositioned inventory in anticipation of a rebound, which caused wholesale to spike. Now it is realized everything is not awesome and although I can’t find a good link I assume banks have tightened standards for car loans as they did with mortgages. So now some dealers are sitting on overpriced inventory not only from May’s pop but still from Feb/Mar’s inflated values, with few being able to take advantage of April’s rout because their state shut them down or because their credit lines were interrupted/limited (those who did will see very nice margin when they do sell). I see the supposed < 5% discount in some states cited by ZeroHedge as a chink in the armor, but the Black Night to this point has opined 'tis only a flesh wound.

      My forecast is sales will weaken in July possibly hitting projections but still negative YoY. If unrest continues into July and/or Coronavirus fears are stoked hard again (fake news or legit) this could set up August for a fall. However the retail used car market will not collapse unless there are serious cashflow issues at the secondary lots or new car dealer used lots, because they will likely be sitting on May/June inventory which they paid too much for. I wouldn't expect any serious decline in wholesale or retail until at least August, which would also be about the time the "V shaped recovery" for the real economy will be proven false.

      • 0 avatar

        Pretty much agree with 28. I have some connections on the wholesale side. Pretty much auctions dried up quick end of March start of April. Bunch of auctions saw huge declines in actual sales but cars were still coming in but less then 20% were selling (whole lot of no sales). As April went on into May volume of cars getting sent to auction dropped like crazy (I assume dealers-OEMs-banks saw what was happening and went into a holding pattern). Even with limited inventory prices went down because no one knew what was going to happen. But on the same token dealer inventory dropped thanks to tax/stimulus money, so little effect on retail prices but some for sure. The few cars Wholesaled in April and May were bought cheap creating some deals. Now states are opening back up, money is really cheap, and dealers have no inventory. So they are driving prices back up on the wholesale side, and volume is back up (but still not to normal levels) All of this means at lease temporarily prices go up. My guess is this is partly being driven by cars sitting waiting to be wholesaled. You can’t disappear thousands of cars a week, so there must be some stockpiles that are going to start flowing.

        In the end I think 28 is right. Next couple months you will see inflated prices, then a dip. How much of a dip is open to speculation as credit markets dealers OEM’s etc have all gotten really good at propping up prices, and I don;t see interest rates going anywhere.

      • 0 avatar
        el scotto

        28-Cars-Later; Thank You Kind Sir and I remembered the hyphens this time. I did click my heels together three times if that counts.

  • avatar
    lstanley

    Used car values will probably go down for all vehicles except for the vehicle I am looking at for my soon to be of drivers age son, which will for some reason go up. Wrangler I am looking at you.

    (Not every American citizen received a stimulus payment.)

  • avatar
    brn

    I’m pretty poor at economic predictions, so maybe assume the opposite of what I’m about to say.

    I don’t think we’ve seen the real hit from Covid. People are out of jobs, but the economic impact is trailing behind. The downturn will hit in a few months, when more people are getting sick. Many organizations are bracing for a very difficult 12 to 18 months.

    • 0 avatar
      Lou_BC

      @brn – I am inclined to agree with you. Some areas will see a 2nd wave this fall but some areas are just starting to head towards the zenith of the 1st wave.
      I was reading that even with vaccines it won’t stop some people from getting infected. It will reduce the odds of severe illness but as we have seen, asymptomatic spread and mild symptom spread is a hallmark of SARS-COV-2.

    • 0 avatar

      This is where it gets bizarre. This has weirdly targeted only certain groups for economic problems. Much different groups then any past economic downturn then I can think of. And the market is still up. Traditionally right now I would expect high ticket items to be selling poorly but their selling great right now. Primary homes, RV’s, Boats, Pools, Hot Tubs, Laptops, TV’s high end home theater, vacation homes,.
      Why well their is the obvious people aren’t traveling thing, but you also have the fact that the people who can afford all this stuff have in large part avoided layoffs so far, and also found out they can work from home more often.
      Even in segments it’s uneven. Take retail for example. Work for JC penny or Macys well not so good, work for Target Walmart, Grocery store, or even Home Depot or Lowes, well your getting more hours then ever before. My nephew working at a Grocery store went from 12 hours a week to 35 in April.

      • 0 avatar
        brn

        mopar, yes, it’s very interesting as to how the pandemic is being very selective in where it’s having a current economic impact. My gut tells me, you can’t have such a dramatic hit in some segments, without it eventually many others.

        I’ve learned to distrust the stock market as an indicator of economic recovery.

  • avatar
    -Nate

    I’m still waiting for that damned check ~ I need it so I can register my newest old Motocycle….

    -Nate

    • 0 avatar
      Matt Posky

      Stay strong. With the weather warming, I’m weighing things I need to buy against a new motorcycle. The summer madness is real.

      • 0 avatar
        -Nate

        Yabbutt ;

        ? Where the hell is the check ?! .

        I’ve already dumped way more into it than it’ll _ever_ be worth and the DMV wants $800 just in penalties….

        Plus transfer and current reggie….

        At least I’m enjoying riding it .

        Oddly enough this same bike that was sure to get you called a fag in public when it was new, gets “wow, that’s a cool bike !” now .

        Honda couldn’t give these away in America, it was a hot seller for decades every where else in the world .

        My bike had zero to do with my penis unlike abut 1/2 of the riders I meet .

        -Nate

  • avatar
    stevemorkel123

    Now is also a good time to sell your car to good company who have years of experience of handling such care. If your are looking to sell your car then visit website. WEBSITE:- https://usedenginesandtransmission.com/

  • avatar
    MRF 95 T-Bird

    Last weekend the 2018 Dodge Challenger GT awd that I bought last fall was hit while parked. The rear axle and wheels were bent in since it was pushed into the curb so it could be totaled. I’m waiting to see what the Geico adjuster says. If he cuts me a check I’ll shop for something else or a leftover 19-20 Challenger GT awd.
    Meanwhile Enterprise hooked me up with a Maxima SV. It’s ok. The VQ is smooth with a fair amount of fwd pull but at $35-40k seems hardly better than an Altima. And the lane departure warning sounds like some cheap toy or 70’s seat belt buzzer.

    • 0 avatar
      redapple

      MRF

      Thank [email protected]# that some lane departures can be turned off. The REALLY GOOD one – you can turn off and they STAY off even during repeated re starts.

    • 0 avatar
      SPPPP

      Ah, that’s annoying. I hope it works out well for you.

    • 0 avatar
      whynotaztec

      How about a quick summary of your Challenger? Is the v6 enough power? Did you ever use it in snow?

      • 0 avatar
        MRF 95 T-Bird

        Got word back from Geico saying that they will be able to repair it and not total it. The estimate is around $10k.
        I’ve enjoyed the Challenger since I’ve owned it. There were other vehicles that I considered like a Mustang but the Challenger sold me on room and value compared to other cars. The Pentastar has enough torque and power plus it gets livable fuel economy, Since it’s awd I can use it in in climate weather plus it rectified my error three decades ago of passing on an AMC Eagle SX4. This past winter was quite mild here in the NYC so I haven’t tested it in snow but in rain it’s grippy.

    • 0 avatar
      Art Vandelay

      Good luck, the only leftover 19’s I saw were R/T Manuals. Good for me as that is what I was looking for. As you mention the snow however, I doubt that is what you are after.

      • 0 avatar
        MRF 95 T-Bird

        Before I found out that my vehicle is going to be repaired I checked out my dealers site. He has a leftover 19 Challenger R/T manual listed as an internet special for $43k.

  • avatar
    CaddyDaddy

    As long as Credit is cheap, used car prices will remain high for those who are cash challenged and are only interested in “what’s my payment”. I’m amazed what people will pay for a used car with a $300 per month payment. Dealers shun cash buyers. If you have cash, private is the only way to go.

    • 0 avatar

      Just financed my first car ever in 25 years of driving. I have always been a cash buyer, but used prices are so high getting a sub 10 year old car with reasonable miles for the family for less then 9K wasn’t happening. Started off looking a little higher but in the end for not that much more I got a 4 year old car. Luckily not a payment buyer had financing thru my credit union before I started shopping, but I can see the appeal and how cheap money drives up prices. Well 1K more only costs me 20 bucks more a month thing.

    • 0 avatar
      Art Vandelay

      Car Max is offering more than the residual on my Fiesta ST at lease end. That has got to be rock bottom wholesale so retail prices must be up there. I’m not really a used sort of buyer so I haven’t followed it.

  • avatar
    Jeff S

    Truck and suv prices will continue to remain higher for the near future but automobile prices will fall further until supply levels out. There is an abundance of late model sedans on the market and there are still some good deals to be had. Truck prices will eventually level off but for now there is a lot of demand for a good used truck. Getting a bargain on a late model used pickup is rare and for a little more you can buy a new pickup with a warranty, cash on the hood, and better interest rate if you qualify. There is a limit to how much more truck prices can increase to where demand will fall especially if more people are out of work. I don’t believe it is as much that people don’t like the new vehicles is that many are being priced out of them and for some the financing to get a newer and better vehicle is hard so they end up buying a older more worn vehicle at a “Buy Here Pay Here” lot.

  • avatar
    gasser

    Here in Los Angeles I have been looking for a used SUV for my son who will be moving back to L.A. from Chicago. I have been looking at the Hertz car sales web site for about 2 months. Very low mileage Edge AWD SUV, 2020 models, had dipped as low as $25K to $26K in early May, just prior to Hertz bankruptcy. Now they are almost all over $28K. This is a $2000 uptick or about 8% in about 6 weeks. I wanted to look at rental agencies stock because they are all being forced to cut their rental inventories to match demand. Most of them are offering high mileage (30K to 40K) 1-2 year old models. I would roll the dice on a former rental, but not with that much mileage. I was looking at Hertz when I was surprised to find 2020s already for sale. Although local Ford dealers will discount a new Edge about $4K, If I could buy a used 2020 with 5-10,000 on the clock for $12K to $15K off new, that’s a sweet spot for me.

  • avatar
    gasser

    Here in Los Angeles I have been looking for a used SUV for my son who will be moving back to L.A. from Chicago. I have been looking at the Hertz car sales web site for about 2 months. Very low mileage Edge AWD SUV, 2020 models, had dipped as low as $25K to $26K in early May, just prior to Hertz bankruptcy. Now they are almost all over $28K. This is a $2000 uptick or about 8% in about 6 weeks. I wanted to look at rental agencies stock because they are all being forced to cut their rental inventories to match demand. Most of them are offering high mileage (30K to 40K) 1-2 year old models. I would roll the dice on a former rental, but not with that much mileage. I was looking at Hertz when I was surprised to find 2020s already for sale. Although local Ford dealers will discount a new Edge about $4K, If I could buy a used 2020 with 5-10,000 on the clock for $12K to $15K off new, that’s a sweet spot for me.

  • avatar
    TDIGuy

    Around here (Southern Ontario), it looks like the focus is more on shifting new inventory. Everybody is offering some variation of six months no payment and/or 0% financing, but used prices haven’t shifted much which tends to lead buyers to new vehicles.
    Except for the ones I’m shopping for of course.

  • avatar
    gp500

    I read an article posted April 22 by Autotrader where it said ‘the bottom fell out on wholesale used vehicle prices — they’re down approximately 12% from a year earlier. It was described as a historic drop.’

    So when you say ‘wholesale prices rose 2.1 percent for the week of June 1’ does that mean they rose 2% from the 12% drop?

    So much conflicting info out there.. the article posted by Autotrader a couple weeks before this one said Dealers have no interest in buying your car and the advice was to ‘Hold On to Your Used Vehicle’..

    All I know is that I’ve had my car listed for over 90 days with no hits.
    I don’t know where you’re getting your info from..

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