SAN DIEGO — Used-vehicle prices are unlikely to crater in the approaching months partly due to the strength of lingering new-vehicle demand, a J.D. Power expert said.
Approaching a “cliff edge” in used-vehicle prices likely won’t occur because pent-up consumer demand on the new-vehicle side equates to probable sales of greater than 4 million vehicles, said Tyson Jominy, vp of information and analytics at J.D. Power, who spoke Monday on the Used Automobile Week conference in San Diego.
If automakers could produce vehicles at 2018 levels, they’d “clear this [backlog of sales] quite quickly” and “be back to a more moderate price environment,” Jominy said.
Used-car market trackers report that wholesale prices peaked in November and December 2021, Jominy said. Within the lead-up to that, prices for the typical used vehicle went from hovering around $15,000 all of the solution to $28,000, he said. Since then, prices have trended about $3,000 lower, Jominy said.
But regardless that wholesale prices have decreased, they have not modified much on the retail level, he added.
Jominy said one reason he’s optimistic that retail used-vehicle prices will probably be durable — more so than 2021, after they kept rising — is since the variety of vehicles flowing back into the market stays fairly limited, and there isn’t any getting around that.
Pandemic-related disruptions have cut the numbers of latest vehicles produced and sold annually since 2020. And leasing rates have tumbled dramatically.
“Vehicles — there’s far fewer of them coming back every 12 months, based on other metrics that we have seen,” Jominy said.
Leased vehicles between one and three years old, particularly, are going to be “very difficult to seek out” through 2025, he added.
“Those vehicles are mainly gone, and the leased market really is not going to return until we start talking about these other aspects, concerning the price environment moderating,” Jominy said.