Recent updates from DesRosiers Automotive Consultants (DAC) show that the used vehicle market did not grow to its full potential last year, even as demand soared in 2021.
That may be obvious to dealers, as its inability to reach a higher potential is the result of supply constraints, which in turn was propelled by the semiconductor shortage that directly impacted new vehicles and had a ripple effect on used.
“Franchised new vehicle dealers saw a moderate growth in sales per store from 294 in 2020 to 319 units for 2021,” said DAC. “Independent used vehicle dealers, who obviously lack off-lease trade-ins, and thus had a harder time sourcing used vehicles, saw little growth in 2021 with sales per store rising to only 200 units from 197 in 2020.”
DAC said opinions were split for what’s to come in 2022, with independent used vehicle dealers expecting an increase and franchised new vehicle dealers expecting a moderate decline.
DAC partnered with its colleagues at the Used Car Dealers Association (UCDA) and reached out to Canadian used vehicle retailers to take the pulse of the industry. Nearly 450 UCDA members responded to its survey, with both independent dealers and the used vehicle division of franchised new vehicle dealers offering their perspective on the state of the market moving into 2022.
“The market situation with booming demand but limited supply obviously led to dramatic price increases,” said DAC. “Passenger cars—which have been falling in popularity for years—saw a comparatively mild increase in used prices—although still remarkable in any normal year.”
Passenger car prices increased most often in the 11-20% range among franchised new vehicle dealers, and then within the 20%-plus range for independents.
The pace of inflation was greater for SUVs, with close to 47.7% of independents noting increases of more than 20% for these vehicles. However, pickup trucks revealed the greatest price increases, with more than half of franchised new vehicle dealers and more than 60% of independents noting price increases in the 20%-plus range.
“The difficulties in the new vehicle market clearly spilled into the used vehicle market in a dramatic way,” said Andrew King, Managing Partner at DAC. “Used vehicle dealers saw prices skyrocket by way of burgeoning demand and limited supply.”
More insights will be provided by DAC in its next news release.
