Mid-Year Thoughts on This Year’s Used Car Market

I want to take just a few moments to share my thoughts about this year’s used car market.  The first quarter seemed to start out strong, with March being exceptionally good for most dealers.  Generally, April, May and June seem to have tailed off a bit in terms of retail demand.  While I’m not prepared to make any big predictions as to what’s going to happen from here, I would like to share a few general thoughts. 

First, the recent market economic news appears to create some uncertainty as to the vitality of the economic recovery.  I think it’s reasonable to assume that shoppers may pause their discretionary purchases in order to assess the strength of the recovery.  Combined with the usual softening of the used car market beginning in mid-summer and continuing through the end of the year, I believe that there is cause for caution on your part.  I’ve also been given information that internet automobile shopping historically falls off in August, approximately 30% from July.

All of these conditions in totality suggest that July would be a good time to reduce inventories.  I can clearly remember last year when the market was very strong through the summer and then abruptly fell off in September.  Most dealers were caught with too much inventory that was owned over the market.  This created the conditions for a lot of distressed selling in the last quarter.  I think it would be prudent on your part to take note of these present conditions, past trend and experience and try to position yourself to be an aggressive buyer rather than a distressed seller during the second half of the year.   I’m eager to know your thoughts and to share any additional information with you.  Please feel free to contact me if I can be of additional assistance.