NEW YORK–The demand for used cars continues to surge even as the market sees some strange developments.
Used car prices at auctions are at record highs, according to Automotive News, even though prices at dealerships, “strangely,” haven’t spiked along with them, Jalopnik.com reported. “Dealers source their used car inventories in part from buying cars at auction. There, the action is setting records, mainly because retail customers are snapping up used cars, depressing used car inventory in a time when new car inventory is also depressed,” stated Jalopnik said.
Scott Gruwell, owner-partner of Courtesy Automotive Group in Arizona, told Jalopnik he attributes the rise to shoppers returning to the market in May and June after being mostly sidelined by the coronavirus pandemic in April. That created higher demand with dwindling supply.
“For a while it wasn’t that bad, but towards the back half of June and the first days of July, it’s been extremely difficult,” Gruwell told the publication. “The market supply is pretty tight.”
Modest Increases
Still, there have been only modest increases in retail used prices, according to J.D. Power. For the week ended July 5, retail used prices rose 0.5% from the previous week and were 2% above pre-virus levels, the report added.
Meanwhile, wholesale used-vehicle values on Cox Automotive’s Manheim Used Vehicle Value Index rose 9% in June vs. May. The index, a measure of price change for used vehicles sold at Manheim auctions in the U.S., hit a record high for June and posted a 6% year-over-year increase. It marks a wild swing from the index’s “historic decline” in April of 11.4%, Cox Automotive Chief Economist Jonathan Smoke said last week, Jalopnik reported.