Used-Vehicle Supply to Decline, Resale Values to Increase in Coming Years

ALG forecasts that the used-vehicle supply will decline over the next few years because of the extensive drop in new-vehicle sales in 2009.

As the used-vehicle supply decreases, resale values increase and vice versa, holding demand constant. Resale values saw a large decline of 16 percent between 2006 and 2009, but have jumped up 24 percent from 2009 to 2010. The decline in used supply will boost residuals an additional 3 percent by 2013.

Used supply is expected to pick back up in 2015 as a result of the forecasted growth in new-market sales, lessening the positive impact on residual values, ALG said.

The gradual recovery of the economy, indicated by improvements in the consumer confidence index and real gross domestic product, has already helped automotive sales pickup in May, according to ALG.

Sales last month were up to 11.6 million SAAR, an 18 percent increase from May 2009.

Overall, new sales are expected to recover to 2007 levels within the next four years.

"In the long run, this recovery will increase used supply for the overall industry, which, in turn, will put negative pressure on resale values," ALG said.

The CUV segment, in particular, will be impacted by the expected growth from now until 2014. Prior to the fuel price highs and economic trouble in 2008, this segment had shown an average of approximately 25 percent year over year growth from 2002 to 2007. The recovery on new-vehicle sales is a positive step forward, but the used supply impact will put pressure on residual values.

Comment On This Story

Comment: (Max. 10000 characters)  
Please leave blank:
* Please note that every comment is moderated.


Newsletter: Sign up to receive latest news, articles, and much more.

Read the latest

Auto Focus Blog: A blog covering fleets, auto rental and the business of cars

Market Forces Driving Car Rental in 2018

An analysis of the conference calls of Avis Budget Group and Hertz Global Holdings reveal trends and initiatives involving fleet right sizing, pricing, ancillary revenue opportunities, and renting to ride-hailing drivers.

Trends Moving the Truck Market

Storylines that emerged from the 2018 Work Truck Show include the increasing need for on-site productivity, inclusion of active safety systems in trucks, DPF frustrations affecting product decisions, data management, and the growing link between fleet management and company revenue.

MIT Study Reinforces the Newfound Importance of Fleet

Uber and Lyft drivers make far less when factoring vehicle expenses, though the actual numbers are now in dispute. A proper lifecycle cost analysis would’ve helped, and shows the benefit of collaboration with fleet professionals.

Job Finder: Access Top Talent. Fill Key Positions.