CNW: Days’ Supply of Used Models Softening Even Further

CNW Research’s latest used-vehicle supply findings concur with several other assertions from wholesale analysts — it’s not going to be easy for managers to keep their used inventories stocked.

Even with trade-ins climbing because of greater new-vehicle sales, CNW revealed on Tuesday that the industry remains at a 45-days’ supply of used vehicles.

Highlighting just how significant the supply dearth is, president Art Spinella noted that January is running at a 44.3 days’ supply, lower than any month of 2011. For comparison, the level stood at 50.7 days in January of last year.

CNW recollected that having a 70 to 80 days’ supply in the early 2000s was not uncommon. In fact, used supply hit 86 days’ in November of ’08.

“Dealers continue to struggle finding the right vehicles for their inventory,” Spinella acknowledged.

“It was once thought that having a 45 days’ supply was ‘ideal,’ but that figure is now considered far too low for most dealerships. The likely ideal level is in the low 50 days,” he explained.

CNW determined that small-car supply — just like on the new-vehicle side — continued to shrink as a share of total sales while full-size pickup inventories rose to its highest level of the year in December.

“Estimated sales for January shows small cars again declining to about 16 percent of sales while pickups should take more than 13 percent,” Spinella projected.

Early January Sales Trends

Looking at how used sales are shaping so far this month, CNW indicated that private-party sales continue to increase as a share of total sales, running more than 26 percent ahead of January of last year.

Spinella pointed out that franchised dealer used sales are up about 4 percent in the opening half of the month while independent dealers saw a near 3-percent decline.

As demand increases, CNW said dealers are beginning to see prices firming.

“For example, franchised dealers' average used-car asking price in January is about $11,516, and they are getting more than 94 percent of that asking price for vehicles bringing average transaction price to $10,855, up 2.9 percent versus year ago,” Spinella highlighted.

“It also is a gain of nearly 3 percent versus December 2011,” he added.

“If the rest of this month reflects historic first-half of January trends, the industry will sell in the 2.17 million unit neighborhood this month, or 8.2 percent ahead of last year’s 2.01 million,” Spinella went on to estimate.

In terms of age, CNW noted the hot products are still the one- to six-year-old rides, but the supply is tight.

Older models — more than 10 years old — are lagging somewhat based on CNW’s monthly segment tracking surveys.

“There is a return of younger consumers to the used-car market which should perk up the over-10 year old sales numbers in the coming months,” Spinella surmised.

“Pickups are gaining in market share while small cars are diminishing,” he continued. “This could change if gasoline prices rise dramatically, but for many of the 20-somethings, a move to anything newer than what they currently drive will improve fuel economy and offset all but massive fuel price increases.

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