Used Vehicle Market Takes Solid Step Toward Recovery with Consistent Improvements in Wholesale Volume and Prices

A steady pace of improvement continues in the used vehicle market as both volumes and prices have stabilized and are starting on the road to recovery, according to the most recent COVID-19 Valuation Services Update from J.D. Power.

"Auction sales increased for the fourth consecutive week, surpassing 50,000 sales in the week ending May 3," says Jonathan Banks, Vice President, Vehicle Valuations & Analytics, Valuation Services, J.D. Power. "This is the first time we have seen this kind of volume since March 22."

The volume picture was matched by encouraging news on the wholesale pricing front. Prices improved for the second week in a row, rising nearly 1% from the previous week.

J.D. Power Analysis for Weekly Auction Sales

"Better still, sales reports that came in after our deadline for the week ending April 26 prompted us to revise prices up by 2% for the period—a one-point improvement over our initial results," Banks says. "It provides us with growing confidence that auction prices are beginning to recover and represents a trend that should continue as the economy opens back up and used demand improves."

Mass Market Passenger Vehicle Segment Shows Sustained Signs of Life

After several weeks of declines that have been more severe than those experienced by the industry overall, mass market passenger car prices were steady for the second consecutive week.

Prices for mass market used vehicles had been on a long-term rise prior to the COVID-19 pandemic. Going into March and April, however, downward pressure on prices for this segment was more severe than it was for mass market pickups and SUVs.

"While many factors are at play, we attribute much of the softness in demand to the extremely price-conscious consumers who are typically attracted to this segment, as well as the reduction in IRS tax refunds this year—which has traditionally helped support used car purchases during this period," says Banks.

Wholesale prices are currently 12% below pre-virus levels experienced in early March and represent a market still under pressure from fractured supply and demand.

"Nevertheless, wholesale prices are on course to recover, as stay-at-home orders are lifted, and markets reopen," Banks says. "Our latest forecast expects used prices to decline 8%-11% through June before improving as the country opens back up."

(To read the entire COVID-19 Valuation Services Update from J.D. Power visit: https://bit.ly/3dryCVE)