January 1, 2018
www.usedcarnews.com
Industry Expects Strong Sales in New Year
By Ted Craig
Rush - Dated Material
Dealers have many reasons to expect a good 2018. Used-car prices continue to moderate, but not plummet. Demand continues to rise. In addition, credit and regulatory conditions favor the market. Dealers do seem optimistic going into the new year. Cox Automotive’s Current Market Index rose to 46 in the fourth quarter from the third-quarter reading of 45. U.S. automobile dealers overall – both franchises and independents – were more positive about the next three months.
The National Automobile Dealers Association forecast gives reason for optimism. The NADA expects used-car sales for its members to reach 15.3 million units in 2018, compared to an expected 15.1 million used sales in 2017. The total used-vehicle market will exceed 40 million retail sales in 2018, according to NADA chief economist Patrick Manzi. “The inlux of of-lease vehicles returning to dealerships is likely to put pressure on new-vehicle sales,” Manzi said. “However, the mix of these late-model vehicles will favor light-trucks more than past years and should be more in line with
present consumer demand.” While higher supply means lower prices, the price declines on used vehicles should moderate this year, said David Paris, executive analyst at J.D. Power Valuation Services. Paris said prices, as measured by his irm, should decline between 1 percent and 1.5 percent in 2018. That is a large improvement over the 5.5 percent decline expected for 2017 and the 4.1 percent decline in 2016. “The worst of the losses are probably behind us,” Paris said. “These declines still put us slightly above pre-recession levels.” Tom Kontos, chief economist for KAR Auction Services Inc., speak-
Don’t put all your eggs in two baskets.
ing at an American International Automobile Dealers Association event, said that while the vehicles might take a hit on the wholesale side, the sheer volume means higher used-car sales. “Those vehicles entering the wholesale channels will ind their way into retail sales,” Kontos said. Jonathan Smoke, chief economist for Cox Automotive Inc., said dealers must pay even closer attention to shifts in the market so they can avoid getting stuck with overpriced units. Smoke expects the market to move in phases this year, just as in 2017. Continued on page 3