The false positive
Hey, this is Jasen Rice, another LotParty Quick Tip. Here we are, mid-April. I can't believe we're well into four months of the year. I wanted to go over the used car market update, and I said it's worse than you think. What you see in the headlines about the used car market, I want to give you another perspective on it. I hope this gets into the right hands to debate what I'm talking about, because I'm seeing it one way, but that doesn't mean I'm seeing it the right way. If anybody sees it differently, I'd love to have them on the show and have the conversation.
The things I'm seeing and hearing that I think can mislead a lot of dealers and inventory managers are the fact that wholesale prices are as high as 2022, and the days supply or days to turn of used cars is as low as it's been since 2022. That gives us what I always call a false positive. It seems positive. Wholesale's up, there's a shortage of vehicles (that's the third thing), and days to turn is as low as 2022, so it's like COVID days are back.
But here's the thing. On the retail side, cars are still depreciating. Dealers are sitting on inventory and adjusting pricing. A lot of dealers right now, and you're going to see it over the next 30 days, are barely dropping prices or barely making adjustments, or raising prices and then lowering them back down because they're trying to stir the pot and get some activity. Yet customers aren't pulling the trigger, and dealers aren't willing to discount the car at the rate they need to because of what they paid to get it on the lot. So margin compression is going to continue to get tighter. I see some light at the end of the tunnel: wholesale percentages are dropping. That means fewer cars are being sold at the lane, a lot of no-sales are happening, or fewer people are there to buy. We'll go over that in a minute.
IRS refunds and the wholesale price index
We're going to look at Black Book Market Insights and at listings I see on sites like AutoTrader and Cars.com. If you're listening on the podcast, go to Facebook or YouTube or LinkedIn and I'll have the files there. This is Market Insights as of April 14, this Tuesday. Before I get there, let's look at IRS filings. The newest for 2026 is April 3, so they're about two weeks behind. Returns received are down about 2% compared to this time last year. Last time we talked about this it was 0.9%, less than 1%. So fewer filings. But here's the kicker: the total number of refunds they've given out is up 3%. Year over year, more people have their money now than they did this time last year. And the average return is up about 8%, from almost $3,200 to almost $3,500. A little more money in people's pockets, and they've already received it.
Back into the Black Book. Obviously wholesale is up. One question I have, and where I'd like a debate if I'm wrong, is just because the dollar amount is up, and I know more people are stepping up to buy cars and volumes are up, is it because the cars are more valuable, or are more expensive cars hitting the market? Are the cars coming in newer, with more equipment? Remember, in 2020, 2021, 2022 with the parts shortages, a lot of cars got sold without certain features, and those missing features make a car less valuable. Maybe the ones being traded in now are newer with that equipment. This is also the time of year when wholesale is up, so don't make me sound like an idiot. I'm just saying what I see sitting out there is higher-dollar, higher-mileage, late-model cars.
Think about what goes to the lane. It's not typically the $8,000 car, the nice 10-to-12-year-old car. Most dealers are keeping the cheaper cars and pushing the later-model, higher-mileage stuff to the lane, so the average price looks higher. Even though values are up and more dealers are willing to pay, my question is, do we track the actual equipment and features, and are these just higher-dollar cars? Because what I see is a bunch of high-dollar stuff sitting on dealers' lots. The wholesale price index is up, but look at the retail price index. It's higher than last year, but not with the same gap. Look at the gap between the 2025 blue line and the 2026 wholesale price. Big gap. On retail, the gap's a lot smaller.
There is no shortage
Second thing: there's no shortage of vehicles. I've been saying this for years. Everybody says vehicle shortage, vehicle shortage. Take a look at retail active listings. Higher than the last two years. That's something we track. When we look at national numbers on AutoTrader and Cars.com, it was 1.4 million and 1.19 million, and now it's 1.4 million and 1.2 million. Just as many cars year over year, April 2025 to April 2026. Look at new: 1.9 million and 1.5 million, now 2 million and almost 1.6 million. So there's more new and the same amount of used sitting out there. Black Book validates it. Don't get tied into "there's a shortage." Total sales are up, but again, it might be up because it's higher-dollar stuff. Prove me wrong on that.
Days to turn is average age, not sale rate
Then there's average age, days to turn. When I hear days to turn or days supply, that's where I cringe. It says 35 days, look how low it is, so cars are moving. I'm not buying that. Here's why. We do hundreds of retail price changes a week and thousands a month with dealers, and I'm seeing cars depreciating and taking longer to sell. What you're seeing here is the average age of listings. This isn't sale rate. It's just like your inventory management tool. The turn in vAuto is calculated based on the average age of your current inventory. It has nothing to do with your sale rate. If you go buy ten cars that are one day old, it brings your average age down. If your average went from 40 days to 30 days because you bought ten fresh cars, it's going to say you turn 12 times, and that's not the case.
I'm seeing the same amount of cars out there and sales are kind of steady. Month over month may be up, but year over year I think a little down. Look at the time period, though. Over the last couple of years retail days to turn has been trending down. What's going on? Average weekly sales at auction have been trending up. Think about that. If I buy a car at the auction, it goes on the internet as one day old, and it brings the average age of what's out there down. It's not based on sales. You can't say, hold out on pricing, there's a shortage, values are high, and it's the lowest turn ever. That's not the case.
The CarGurus proof
Here's CarGurus. We've only been looking at this since December. Their listings are trending down on average, but that's because of December and tax season. Year over year on AutoTrader and Cars.com, it's the same. Notice this pattern. The blue represents 0-to-30-day-old cars, and the yellow represents aged cars over 60 days old. Back in December there were just as many aged cars on CarGurus as there were fresh cars. Remember what I'm telling you about turn being low, and how it's not because cars are selling faster. It's because there are fresher cars on the internet. Here's proof. The amount of cars over 60 days old on CarGurus went from 713,000 down to 530,000. Fewer aged cars. The buyers in tax season took advantage of the good and great deals, the cars priced at 88 or 90% of market, and took those out of the market.
Look what happened at the same time. Fresh cars went from 737,000 to 800,000. Just like I said, more cars are being wholesaled at the lane, and more cars are coming fresh into the market. More fresh cars drive down the average age of cars in the market, making it look like cars are selling fast, so we can hold out on our pricing and overpay for everything because wholesale's up. False positive. It doesn't mean we're turning more inventory or turning it faster. All that means is the average age of the cars listed online is going down, and it makes it seem like they're selling fast. It has nothing to do with sale rate.
And look at the red line. That's the middle bucket. A lot of these fresh cars are starting to age. There were 333,000 cars that were 30 to 60 days old at the end of March, and now it's up 50,000. A lot of the 0-to-30 cars are turning 30 to 60. Guess what happens a month from now, into May. Aged cars build back up. The inventory on CarGurus is lining up no different than your current inventory. You are probably experiencing a middle-bucket buildup as cars sit. You and every other dealer we see are dropping pricing to get volume going, and in the meantime, to replace those cars, you've got to pay up for them. So the average age of 35 days is low, and wholesale's high, but retail's not.
Shopper index and sale rates
Add the shopper index to that. Go to Google for people looking for used cars. The tax season peak was February and March. March 1, out of 100, scored an 82. It shot back up at the end of March going into April, 89. Now it's down to 60. That's a 30% drop in shopper index. Even if you go back to last year or 2024, February and March are high and by April and May it drops. Last March was 69, and by this time in April, 55. A good 20% drop. So we're already seeing this big drop-off in shopper activity. Gas prices, the war, everything else, and tax season is kind of over. More people have their money now.
With that, the green line, which is our dealers' two-week sold volume, went from 50%, meaning they were selling 50% of their inventory every two weeks, 100% of their inventory a month, down to 43% as of the 14th. As of today, that number is down to 40%. On average, our dealers across the country, hundreds of dealers, really good operators, are selling 40% of their inventory in two weeks, 80% a month, a 20% drop from the peak in March. With the drop-off in shopper activity and retail sales, what's being wholesaled dropped too. 68% of used cars running through the lane were selling. Now it's down to 64%. Fewer cars are selling at the lane. It could be just as many buyers there, but there's a floor no one's accepting, or fewer people at the lane because things are slowing down. So all that's falling. The average age of cars online, the black line, is still dropping, but it's going to shoot back up as things slow down.
Be a buyer in June
So the reason I said the market update is worse than you think: there are a lot of positive headlines. Wholesale is up, which is hard if you're a buyer, but people take it as "cars are more valuable right now, so I can raise my prices." That's misleading. Average days to turn is down, the used car turn rate is as low as it's been in the last three years, COVID-type numbers. I think that's wrong. It's just based on the average age of what's out there. All the old stuff got cleaned out with good deals, and the fresh stuff coming in is driving that average age down. Wholesale being up could also be misleading because it could be higher-dollar stuff coming in. Nobody's taking that nice $10,000 car and wholesaling it. They're taking the $50,000 Yukon they already have three of that aren't selling, gas prices are high, and putting that at the lane, which drives up what's selling at a higher dollar.
Take a peek at these numbers, but over the next 45 days, between now and June, you're going to have to position yourself. I want to be a buyer in June, by the way. As April and May slow down, everybody stops buying by June, floors drop, and I can buy stuff good. That's how we're positioning our dealers. We don't just focus on April. I'm positioning them for May and June and how that's going to look going forward. If you want to get with our team, we do weekly calls with you. We go through all your analytics, dive way deeper than this based on your data and your inventory alone, and make adjustments to get your sale rate back up along with handling your leads more efficiently. One more thing to be aware of: we are doing a First 30 Challenge, a one-day intensive here at the Lotpop office going through your metrics, followed by four weekly calls to make sure you're making progress. Hope this was helpful, a little lengthy. Check in for the next video. Thank you.
Transcript lightly edited for readability from the live stream. Watch the video above for Jasen's screen share.
