Beige Book: Used Market Consistently Strong

The overall retail sales market for dealers examined by the Federal Reserve in its most recent reporting period appeared fairly positive, and for the districts sharing insight on used-vehicle sales, the environment is a solid one.

In its latest Beige Book report, Fed pointed out rather stable used-vehicle sales, as well as a robust new-car market.

“New-vehicle sales remained strong and inventories of some popular models were tight. Sales of used automobiles held steady,” officials noted in the report.

Expanding upon this, the Fed added: “Automobile sales generally remained strong, although the pace of growth moderated in a few districts.

“Sales of used vehicles held steady, and a slight decline in prices was reported. Inventories of popular vehicles were tight,” it continued. “Outlooks were positive, and contacts across several districts expect steady growth in sales in coming months.”

While not all 12 Fed districts offered insight on their respective area’s used-vehicle market, the ones that did noticed dealers reporting good signs for their business.

In the Second District (New York), for example, dealers talked of a healthy used market.

“The used-car market continues to be strong and prices remain elevated, although dealers in the Buffalo area note some recent softening in prices at auction,” the Fed said of the Second District. “Wholesale and retail credit conditions remain favorable and continue to improve.”

Moving over to Cleveland, the Fed observed a similar trend in the Fourth District.

“Purchases of used vehicles were fairly steady year-over-year — inventories are building and prices declined slightly,” officials noted.

Sharing more auto-related insight, they added: “On the financing side, we heard two reports that banks are more willing to work with dealers. Leasing activity picked up. Dealers are investing in manufacturer-mandated facility upgrades and imaging programs. Hiring for sales and service positions continued, but at a very slow pace.”

In the Eighth District (St. Louis), the Fed gave a more concrete numbers breakdown of how both the new and used markets are faring. Among its data points, the Fed illustrated that a fifth dealers in the region saw used sales climb relative to new sales, and another fifth saw the reverse.

Lastly, the Fed shared some of its used-vehicle insight from the Twelfth District (San Francisco). It found that consumers here are still going after used vehicles, and with low inventory, this led to high prices.

“Demand remained strong for used vehicles and combined with tight inventories to keep prices elevated,” the Fed explained.

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