7.5 Million Additional Used Vehicle Supply…..
Used car levels are increasing at record levels. Manheim is projecting that there will be 7.5 million vehicles available by 2018 and this year will have over 6 million vehicles. That level has not been reached since 2001-2003, and dealerships need to make sure that they have their used car inventory cleaned up by mid year. The 2 charts below show upcoming and past trends. The first chart shows the shopping trends for Autotrader since Jan 2014 and you can see that Jan-March is the peak months for shopper count on their site. Going into April it starts trending back down until the July/Aug summer peak (still not at the same peak as Jan-March) then straight down from there. The second chart shows the projected inventory levels going into 2018 (check out the Wall Street Journal’s article “Hot on the Lot: Leasing a Used Car” for more information http://www.wsj.com/articles/hot-on-the-lot-leasing-a-used-car-1460417861 ).
I would suggest dealerships get their inventory cleaned up by May, be able to buy in June for July/Aug sales then get lean and clean going into the end of the year. I have already been working with my dealerships to clean up their inventory, cut back inventory levels to sale rate and traffic and not to hold onto anything. I want them to be able to be buyers by end of April and going through June where I believe we can be buying at a lot lower rate and price competitively and make some gross while everyone else is dumping inventory, for a lose, that they bought in March while traffic was still good.
I have also noticed in most my markets the days supply levels have already started to go up which is 15-30 days earlier then last year so it seems either the shoppers are slowing down or inventory levels are already increasing or maybe both.
I believe this year will bring issues with inventory levels increasing throughout the year, shopper counts dropping, new car incentives and throw an election year into the mix and its going to be a crazy year.