U.S. new vehicle sales are going to decline in 2018, but economists say used vehicle volume will grow 2 to 5% next year. The added used volume should help franchised dealers offset lower new vehicle sales, but independent dealers face greater competition for inventory, a panel of economists told the combined Used Car Week conference and National Auto Auction Association convention here.
The used vehicle industry can expect a strong general economic climate but will face continued challenges of shrinking margins, lower vehicle prices, disruptive technologies and political and regulatory uncertainty, the panelists agreed. More used vehicles re-entering the marketplace will further depress prices in 2018, said Tom Kontos, chief economist at KAR Auction Services, who predicted used volume will rise as much as 5 percent in 2018. Ira Silver, NAAA chief economist, forecast 2 to 3 percent higher used vehicle volume next year.
Jonathan Smoke, Cox Automotive's chief economist, noted that the 2018 used-vehicle sales gains would be driven by increased supply, mostly because of 300,000 more off-lease returns. He predicted auto auctions would have flat volume in terms of retired fleet vehicles and units wholesaled by dealers, plus only a small increase in repossessions. Smoke estimated that 39 million used vehicles will be sold in 2017, including private sales from one individual to another. He predicted a 2 percent increase in 2018.
