COVID-19 Market Insights

BLACK BOOK – Here is a quick recap of industry related headlines over the last week: 

• Wholesale prices continued their decline last week, for the thirteenth week in a row. 
• Average retail listing prices of available inventory have been essentially flat over the last two months, but overall pricing began to show signs of softening over the last two weeks leading up to and during the Thanksgiving holiday. Full-Size Truck retail prices have also started to show small signs of softening; however, values remain well above last year. 
• Used retail listing volume continued to increase last week, but remains at levels lower than last year – about 3.6% below prior year, and 10% below where the industry began 2020. 
• “Nowcast” for annualized GDP growth rate in the fourth quarter is 11.1%, according to GDP Now’s forecast from the Atlanta Federal Reserve. 
• Weekly initial unemployment claims decreased slightly, as noted in last week’s DOL report.  
• The November unemployment rate edged down to 6.7% according to U.S. Bureau of Labor Statistics. 
• Job recovery slowed to a crawl in November – total nonfarm payroll employment rose by just 245,000 during November. Since the massive layoffs began in April, the economy recovered only half of the jobs lost, and we are still about 9.8mm jobs below pre-COVID levels. 

Last Week’s Highlights from the Wholesale Market 

Volume-weighted, overall Car and Truck segments both experienced continued softening in values last week, with the rate of decline increasing compared to the prior week. The overall market decreased by –0.71% this past week (compared to –0.38% the prior week). As for specifics, the overall Car segments decreased –0.78% (compared to –0.48% the prior week), and the overall Truck and SUV segments decreased this past week at a rate of –0.68% (compared to a decrease of –0.33% the prior week).  

The graph below shows week-over-week depreciation rates for the entire market, including Cars and Trucks/SUVs/Vans for the last several months. We also show an average weekly change versus several previous years (grey line). 

News from the Retail World (Used and New) 

• Overall, used retail prices have started to show a gradual decline, but are still at levels well above this same time last year for many of the larger SUV segments (Mid-Size and Full-Size) and Full-Size Trucks. Full-Size Trucks have started to show signs of softening in recent weeks, mainly due to the 1500 level series trucks that are seeing volumes improve slightly on dealer lots. 
• As a result of the COVID-19 mandates that have recently been going into effect in many parts of the country, along with the toll that COVID has continued to take on the economy this year, dealers are seeing their retail demand suffer.      
• Last week we reported on the potential for fewer Cadillac dealers in the future, as dealers were offered an option to be bought out of their franchise to avoid having to pay for dealership upgrades and training, as Cadillac moves toward electrification. Initial reports from The Wall Street Journal are estimating that roughly 17% of current Cadillac dealers have decided to take this option.   
• Supply chain struggles have been a problem for OEMs since the onset of the pandemic when production was initially halted and those issues aren’t improving quickly. In many places delays have gotten better, but recent spikes in COVID are leading to more delays. The much-anticipated return of the Ford Bronco is one of those vehicles being impacted. We will now have to wait until next Summer to see this vehicle hit dealer lots.  

What Comes Next? 

• We are starting to see an incremental influx of used inventory coming to the marketplace, but with weakening demand, we saw a decrease of about 15% in the auction sales rate, compared to the Summer months. 
• It also appears that most of the lease returns and trade-in vehicles never make it to auctions, as grounding dealers are keeping the inventory for retail sales.  
• Most lenders have re-started the process of repossessions, at least on paper, as the economy continues to feel the effects of high unemployment, but the process is slow and the number of vehicles hitting the auction lanes is still insignificant.  
• All these factors contributed to the overall reduction (compared to the third quarter) in the number of vehicles sold on the wholesale market.  
• With COVID-19 cases and deaths increasing substantially across the country, we expect this weakness in demand and overall cautiousness by dealers to last well into 2021. 

With much weaker retail demand without a second federal stimulus, and a projected increase of used inventory, we forecast a higher than seasonal drop in wholesale prices this winter. It is worth noting that after record breaking increases in wholesale prices over the summer, we are still well above pre-COVID-19 prices, so the projected drop over the winter months will simply get us back to the baseline. 

Longer Term View 

Although used vehicle supply will decline significantly due to cuts in lease and fleet (both rental and commercial) sales throughout 2020 and into 2021, the economic effects of the pandemic will continue to be felt as far out as three years from now (for example, the most recent quarterly Federal Reserve projections from September show unemployment above 4% for the foreseeable future), Black Book projects that wholesale vehicle values will decline to the pre-COVID-19 baseline in 2021 (from record highs during the summer of 2020) and will stay at these levels until at least 2023.Page Break 

Economic Conditions 

Job Market 

• The graph above compares weekly initial unemployment claims from the current recession against the Great Recession of 2007 – 2009. The severity and speed of job losses during this crisis is unprecedented. The horizontal (x) axis is an offset (in months) from the beginning of the recession, with week 0 being the week of March 21st. 
• Last week, the Labor Department reported that the US added 712,000 new jobless claims – a decrease of 75,000 from the revised prior week’s numbers.  
• Since March, we have seen 37 consecutive weeks of record layoffs and furloughs, indicating that businesses are still struggling to start a full recovery.  

• In the early stages of the crisis, the US unemployment rate in April skyrocketed to 14.7%, the highest monthly rate since the Great Depression.  
• The May unemployment level decreased to 13.3% due to the success of the Federal Paycheck Protection Program (PPP) and other stimulus measures enacted in part by the Federal Reserve and Government.  
• As the country and economy continued to reopen during the early part of June, the monthly unemployment numbers eased further to 11.1% and dropped to 10.2% in July.  
• In August, we saw further improvement in the labor market as the unemployment rate fell to 8.4%. 
• The September unemployment number dropped to 7.9% mostly due to the exit of many workers from the employment pool. Additionally, job gains slowed down significantly. 
• In October and November, the economy continued to slowly recover, and unemployment rate dropped to 6.7% in November while job gains slowed down even further. 
• The Labor Bureau also noted in its reports that there was a classification error in its surveys, and the real unemployment numbers were higher for each month since March, as illustrated above. 
• There is concern that without further federal stimulus, these gains will be temporary and employment numbers may deteriorate. 

This recession is very different and unprecedented in the labor market – reflecting an almost instantaneous jump in unemployment with projected fast growth and recovery within several years. The graph above compares unemployment rates for the last several major recessions. The horizontal (x) axis is an offset (in months) from the beginning of the recession. 

Although we have seen a reduction in unemployment claims, the initial economic shock and job losses have created a deep hole for us to dig ourselves out of. Between February and the end of November, the nation lost close to 9.8 million jobs. 

Consumer Confidence 

Not surprisingly, consumer confidence has been on a rollercoaster over the last six months. 

• At the beginning of the year, sentiment was strong – the University of Michigan’s Monthly Consumer Sentiment Index in February was at 101 points.  
• As the COVID-19 pandemic spread across the US, the Index dropped to 71.8 points in April and increased slightly to 72.3 points in May.  
• During testimony by Federal Reserve Chair Jerome Powell, he noted that during the months of April and May, “stimulus checks and unemployment benefits are supporting household incomes and spending.”  
• With these one-time stimulus payments and extended unemployment benefits helping the economy, the Index for June increased further to 78.1. The gains, however, were not uniform across the country. With a significant reduction in the number of COVID-19 cases, the Northeast region led the way with a record 19.1 points month-over-month jump, while the Southern region rose just 0.5 points due to the dangerous increase in numbers of new infections and fear of further shutdowns.  
• With the weakening of the economy, and the increase in new COVID-19 cases across the South, consumer confidence retracted to the lows of April in July. The University of Michigan’s Monthly Consumer Sentiment Index for July decreased to 72.5 points and increased slightly in August to 74.1.  
• The September Index increased further to 80.4, but still remains heavily depressed compared to pre-COVID and last September’s numbers. 
• Final numbers for October stood at 81.8 – a slight improvement since September and the highest point since April’s drop.  
• As number of cases and deaths surged across the country, consumer confidence slid to 76.9 in November. 

Gross Domestic Product (GDP) 

• The Bureau of Economic Analysis (BEA) published the third estimate of GDP in the second quarter (as of September 30th) – real GDP decreased at an annual rate of 31.4%. This was the highest drop in GDP ever recorded.  
• BEA’s advanced estimate for third quarter showed an increase in real GDP at an annual rate of 33.1%.  
• The current “nowcast” from the GDP Now model [from the Federal Reserve] estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2020 was 11.1% on December 1st.  

Delinquencies in Automotive Lending 

The number of accounts in ‘hardship’ jumped substantially in April, and kept increasing through June across all risk groups, according to the Monthly Industry Snapshot by TransUnion. The numbers stabilized in July and improved in August and September. In October, about 3.7% of all accounts were in hardship – this was roughly a 576% increase over last year. The increases were across all risk tiers. As deferrals expire in the upcoming months, coupled with a high unemployment rate, lenders expect a large portion of these ‘hardships’ to become delinquencies.  

The numbers are substantially higher for subprime tiers – as of October, about 11.75% of all subprime automotive accounts were in hardship – a relative stability since August. 

According to the “Senior Loan Officer Opinion Survey on Bank Lending Practices” from the Federal Reserve, lenders tightened standards on auto loans during first three quarters of 2020.  

The Board of Governors of the Federal Reserve System released results from the fourth quarter that showed even more tightening of their standards for auto loans.  

Fuel Prices 

Since their lowest point at the end of April, gasoline prices are up $0.35, to $2.12 per gallon last week, a two-cent increase from the prior week, according to the U.S. Energy Information Administration.  

After dropping by $0.70 in the Spring, diesel prices remained relatively flat through the Summer and Fall months, below $2.50 per gallon. Last week prices went up by four cents to $2.50 per gallon. 

Current Wholesale Market Overview 

Auction Insights 

• Even though retail demand is softening, dealers are still reporting that lack of inventory is still a problem. Leading up to the Thanksgiving holiday we saw buyers slow down in their restocking of lots, especially when sellers were holding firm to high floors. However, this past week we saw dealers return to more active bidding and sellers lowering their floors. This led to a week with a higher overall sales rate, but values took a hit and increased the weekly depreciation rate. Even the Full-Size Truck segment saw valuations take the largest single week decline since April of this year.    
• Manheim continues to physically run vehicles at select auctions around the country. At one point the number of participating auctions reached 14, but Manheim Nevada is back to postcard only sales due to new regulations in place due to the spikes in COVID cases.  
• High condition scores and low mileage units continue to garner the most attention and bring a premium as dealers are looking for units that are front-line ready. Anything that requires too much reconditioning is a risk that many dealers aren’t willing to take right now with retail demand showing signs of softening.  

Auction Volume 

• Over the last several weeks we have seen wholesale sold volume decrease as dealers started to pull back on purchasing.  
• The drops in volume were not uniform across all auctions and platforms.  
• We saw a significant drop in sold volume (both month-over month, and year-over-year) in wholesale channels from September to November. There are several factors that contributed to this drop: 
• The no-sale rate increased substantially during the Fall (by about 15%), as many remarketers were not willing to adjust price floors. 
• We also saw a decrease (YOY) in available units: 
• Rental companies held back some units to cover Hurricane related rentals in September and October. 
• They sold lower volume in November as purchases of new models are being pushed into 2021. 
• Repossessions are slow to hit the market, as the process has slowed down significantly compared to pre-COVID days. 
• Dealers are holding on to more trade-ins and lease returns compared to previous years. 
• The graph below illustrates the estimated year-over-year change in the monthly sold volume in the wholesale market. The summary includes all major wholesale channels, including open auctions (digital and physical), dealer-to dealer platforms, direct to dealer sales, etc.  

Sales Rate 

• At the onset of the pandemic, shelter-in-place orders took effect and sales rates quickly tumbled into the teens. 
• Subsequently, rates began climbing each week before finally stabilizing in June and July.  
• After months of consistently strong sales, much of these seller’s best inventory was sold, and retail demand began to soften in certain segments. As a result, sales rates started to decline in August leading up to Labor Day. 
• Sales rates stabilized in September and October as sellers adjusted floors to reflect the weakening wholesale values. Heading into the Thanksgiving holiday, with COVID-19 cases sending many areas around the country back into lockdown, we saw the weaker retail demand leading to lower demand on the lanes and increases in no-sales. Post-Thanksgiving, the sales rates increased as buyers still need inventory after the successful summer months and sellers were more willing to negotiate.  
• Black Book’s estimate of the overall Weekly Average Sales rate is presented below.  

Current Wholesale Price Trends 

Current Market Level View 

• Volume-weighted, overall Car segment values decreased -0.78% over the last week, an increase from the depreciation of –0.48% experienced the week prior. In the auction lanes many sellers held firm to floors. 
• The luxury segments, especially the high lease volume Near Luxury segment, are seeing consistent week-over-week declines now that the remarketers have adjusted floors in recent weeks. The luxury OEMs typically have very strong upstream sales so what does make it to the auction has typically been picked over and pre-selection of inventory is also contributing to the weekly declines as the available wholesale inventory is in poorer condition. 
• Compact Cars declined for a fifteenth straight week and now have an average weekly rate of decline of –0.92%.    

• When volume-weighting is applied, the overall Truck segment (including pickups, SUVs, and vans) values declined -0.68% last week, an increase in depreciation compared to the previous week’s change of –0.38%.  
• The smaller crossovers continue to see fairly consistent week-over-week declines. However, even the Full-Size SUV and Full-Size Truck segments increased their rate of declines this past week. 
• Full-Size Trucks have been exceptionally strong since values rebounded over the summer months. However, this past week the values started to increase their rate of decline on the 1500 level trucks. In contrast, the 2500 and 3500 models are still not showing any signs of weakness.   
• Full-Size Vans have been trending throughout the pandemic as if all is normal in the market. This segment came into the pandemic with lower than normal supply levels so the declines were never as severe and there was no large bounce back since the values didn’t see the same level of decline as most other segments. As consumers are finding themselves ordering more and more online, this is increasing the demand on this already low of supply segment, so the expectation for this segment is that values will continue to see little depreciation in the months to come.  

​

Black Book’s Seasonally Adjusted Retention Index 

The graph above compares Black Book’s Seasonally Adjusted Retention Index for 2019 and 2020 calendar years. The Black Book Used Vehicle Retention Index is calculated using Black Book’s published Wholesale Average value on two- to six-year-old used vehicles, as a percent of original typically equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition. The Index offers an accurate, representative, and unbiased view of the strength of used vehicle market values. It measures an ‘apples-to-apples’ year-over-year retention comparison. 

• 2020 started slightly below 2019 levels, but the market showed early strength in February and March.  
• As the US economy shut down due to the COVID-19 pandemic, we measured the highest single month drop in April of 6.9 points since launching the Index.  
• As we entered July, wholesale prices continued the rebound that began during the second half of May and continued through the month of June, with June’s Retention Index climbing back to pre-COVID-19 levels with a record jump of 9.1 points.  
• Black Book’s July Index value jumped above 2019 to 126.0 points as wholesale prices continued their climb.  
• August Retention Index jumped further to 129.0 points – the highest retention level ever recorded since the inception of the Index in 2005. 
• Our September index came at 130.8, a – 1.4% increase from August and 12.8% higher than in 2019. Market strength was driven mostly by the Full-Size Pickup segment. 
• The October market Index was again helped by the strength of the Full-Size Pickup segment – Index dropped slightly (0.7%) from September to 129.9. 
• In November prices depreciated at a slower than seasonal rate which led to a small increase in the Index by 0.7 points to 129.9. 
• Our “nowcast” for December shows a decrease in Index to about 128.0 points. 

During the last recession (2007-2009), the Index declined by about 15 points in a span of 12 months before a recovery started. We project that the Index will decline over the next five months after experiencing the summer’s strength. The graph below shows the historical trends in the Black Book Retention Index that covers the last 15 years, including the Great Recession. 

Used Wholesale Price Projections 

Wholesale Price Impact Under the Most-Likely Economic Scenario 

2020 In Review 

• The wholesale market started the year strong from January through March, as prices increased during the first quarter. 
• Wholesale prices dropped significantly in April, as uncertainty over COVID-19’s impact and response dampened vehicle demand. This resulted in an overall wholesale price decline of 5.9%.  
• We saw a substantial improvement in prices during the last two weeks of May as many states re-opened their economies, and the monthly decrease was limited to only -1.5%.
• During the summer months, demand in the automotive market was fueled by federal government stimulus and delayed tax season. Additionally, used and new inventory shortages drove wholesale prices up. 
• In June, wholesale prices continued to increase, and the overall market appreciated by 5.7%. As a comparison, last year’s prices declined by 0.9% over the same period.  
• Wholesale prices increased by a record 7.0% in July. 
• Wholesale prices continued their ascent in August and increased by an additional 2.7%. 
• Prices started to decline during the first week of September and declined by 1.0% by the end of the month. Performance varied by segment with the strength coming from Full-Size Pickups (which increased by 1.2%). 
• In October, we saw overall seasonal price declines of 2.7%, on par with previous years. It is worth noting that without the strength of the Full-Size Pickup segment, the average price decline would be steeper. 
• Overall depreciation in November slowed down a little to 2.1% due to continued strength in the Full-Size Pickup segment. 

Short-Term Outlook 

The graph above shows a market level weighted average projected (dashed lines) and historical (solid line) wholesale values for all 2017 model year models.  

• We project a continuous drop in wholesale prices through the winter, as the US economy suffers through the effects of COVID-19, and due to an increasing used supply. Prices will start to go back to “normal” seasonality in the second half of 2021 as the economy becomes stronger and supply shrinks. 
• We also anticipate that older (>6-year-old), cheaper vehicles in average condition will not decline as much due to increased demand for these units.  

Long-Term Projections (36-Month Residual Values, Fall / Winter of 2023) 

The economic effects of the pandemic will continue to be felt out to 36 months from now. We project values will return to the pre-COVID-19 baseline as used supply will decline due to cuts in retail and fleet sales throughout the remainder of 2020 and into 2021. 

Used Retail Vertical  

Used Retail Prices 

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space.  

• From the peak in early April, until the end of June, retail listing prices decreased by about 4%.  
• Starting in the second week of June, we saw an increase in used retail prices fueled by higher consumer demand due to stimulus payments, the federal Paycheck Protection Program (PPP), and limited used and new inventory.  
• By early August, used retail prices rebounded to above pre-COVID-19 levels. 
• We started to see some weakness and decline in retail prices in November.  
• We expect used retail prices to decline this winter as demand will continue to soften in the absence of stimulus payments during a weak economy. 

Used Retail Inventory 

• Many dealers continue to report a shortage of used inventory in the wholesale marketplace. As a result, from the peak in February, we have seen a decline in the number of used retail listings by between 20% and 25%. Current inventory level is about 10% below where we started the year and slowly growing. 
• The true shortage of vehicles is probably not as severe as this decline would lead you to believe, as many dealers sell some of their best inventory in the first several days before listing them online. Nevertheless, the shortage of used inventory helps keep retail prices elevated, even in the weak economic conditions.  

• The graph above shows the weekly average of the number of retail listings collected by Black Book, indexed to the first week of the year. We see a continuous decline in the numbers starting at the beginning of May as the economy started to open in the states outside of the Northeast. 
• The graph below shows year-over-year change in average monthly retail listings. 

• We started 2020 with active retail listings above previous year’s levels. 
• By July, the listing volume dropped to about 7% below 2019 numbers.  
• August saw another drop in listed inventory to about 9% below 2019. 
• In September, inventory listings continued to grow and were about 6% below 2019. 
• In October the number of listings continued to rebound and were about 1.8% lower compared to last year.  
• Currently, at the beginning of December, inventory levels are about 3.2% lower, year-over-year. 

Used Retail vs. Wholesale Prices Trends 

Each week, members of the Black Book automotive analyst team, data science team and executive leadership team speak with no less than 30 dealers, along with buyer and seller representatives, wholesalers and others, who represent hundreds of franchise and independent dealers nationwide. These industry experts, along with experts we speak with from leading fleet management and rental car companies, auction leadership, and other industry experts, help to clarify and connect the dots between the wholesale and retail markets, adding to the insights that our data reveals.  

Since the start of the pandemic, we have been observing different trends in both wholesale and retail prices (see graph below).  

• In April and May, wholesale prices declined at a higher rate compared to retail prices. As margins grew, dealers reported healthy profits on a per vehicle basis. Retail prices displayed stickiness on the way down.  
• Similarly, as wholesale prices came roaring back to pre-COVID-19 levels in July and August, retail prices were slow to recover, exhibiting the same stickiness on the way up.  
• As the wholesale market started to decline in September and October, we began to experience the early stages of our expectations that both wholesale and retail (outside of the Full-Size Pickup segment) prices will decline significantly over the remaining months of 2020. 

The graph below captures this retail / wholesale dynamic since the start of the year. Prices are indexed to the first week of the year. The black line is Black Book’s Retention Index (not adjusted for seasonality). It is calculated using Black Book’s published Wholesale Average value on two- to six-year-old used vehicles, as a percent of original typically equipped MSRP. It is weighted based on registration volume and adjusted for vehicle age, mileage, and condition. The blue line is the retail index – the average listing price of available retail inventory adjusted for mileage. 

New Vehicles Sales Outlook 

We still anticipate a significant reduction in US new vehicle sales in 2020 (both retail and fleet sales) due to a continued reduction in consumer demand. This is the result of several ongoing factors, including less miles driven due to remote work and shelter-in-place initiatives, high unemployment, and an overall feeling of uncertainty by consumers.  

Overall, new vehicle sales were down 17% during the first eleven months of the year compared to last year (with a 6% YOY increase in September and 1% increase in October mainly due to strong retail sales).  

Our New Vehicle Sales Outlook was updated based on stronger than expected August through October sales numbers. Due to continuous production disruptions, and much weaker demand due to the economic slow-down, we project at most 18% drop (compared to pre-COVID-19 projections) in new sales in 2020 to at least 13.9mm units in our base economic scenario.  

In the longer-term, we expect new sales volume to return to pre-COVID-19 levels within five years.

Used Vehicle Supply Projections 

Black Book projects a higher-than-expected used vehicle supply in the wholesale marketplace for the rest of 2020 due to several factors: 

• Delayed lease returns resulting from lease extensions offered by OEMs – more than 560,000 additional three-year-old units in the second half of 2020. 
• Extensive de-fleeting by rental car companies due to lack of consumer and business traveler demand, and financial pressure to raise cash – at least 250,000 additional one- to two-year-old vehicles were added to the market in the second part of 2020. 
• Increased repossessions due to deteriorating economic conditions in addition to delayed repossessions during spring and summer months – we expect the volume of repossessed vehicles to at least double in the next six months compared to last year. This additional volume could exceed 1.0 million additional units in the next 6 months. 

Short Term Lease Return Projections 

When we started the year, lease returns were projected to hit a record volume of above 4.1 million units. Once the pandemic was underway and most manufacturing halted, OEMs started to encourage lease extensions in order to push returns further into 2020, when they would be able to provide replacement vehicles. As a result, we project at least 560,000 additional units in the second part of 2020 (compared to the pre-COVID-19 estimates) due to a slowdown in sales in April / May, along with expected turn-ins of the lease extensions. So far, a large portion of these units are being kept by grounding dealers and not being sent to the auctions. 

Repossessions 

About 1.9 million vehicles were repossessed by lenders and sold (mostly) through wholesale channels in 2019. During the beginning of the pandemic, most states put a moratorium on auto repossessions and most lenders had deferral programs to help owners through the first several months of the recession. Most of the lenders have ended their deferral programs. Our survey of lenders and automotive recovery companies suggest that the volume of repossessed vehicles will at least double in the next six months. We expect that there will be substantial challenges at every step of the process as recovery, transportation, and disposal are not fully recovered. 

Rental Unit Returns 

Business and leisure travel collapsed at the end of March – air travel is still down by about 60% according to the TSA. We expect a significant reduction in both categories for the remainder of 2020. In addition, there is no expectation that travel will return to pre-COVID-19 levels over the next several years. According to the IATA (International Air Transport Association), air travel will not return to pre-COVID-19 levels until after 2024. This puts tremendous financial pressure on rental companies that rely on air travel to reduce both their current fleet and scrutinize future vehicle acquisitions.  

At the end of May, Hertz filed for bankruptcy in North America as a result of the pandemic. Hertz was able to secure a deal with its lenders that allows a gradual reduction of fleet – over 182,000 units between June and December. In addition to Hertz, other rental companies reduced their fleet during the summer and fall months to match lower demand for rentals. This practice lead to over 250,000 additional rental units hitting the wholesale market in the second half of 2020.  

In the longer term (later 2021 – 2023), the drop in rental return volume will benefit the price of newer used units, as supply will be limited. 

Longer Term Used Returns Projections 

With the reduction in retail and fleet sales over the next several years, we project a substantial decrease of available used inventory in the years to come. The graph below illustrates the numbers of returned vehicles up to 8-years-old. This lower level of used inventory will be beneficial to used car prices as supply will be limited, helping to bolster valuations. 

Originally posted on F&I and Showroom