Used Car Shortage Looming for the Next 5 Years

Overview:

• A hidden crisis is looming in the automotive retailing industry, stemming from the pandemic's impact, which continues to affect the market even years later.

Key Points:

• Fewer Lease Returns:
  • The pandemic resulted in lower sales and lease volumes in 2020 and 2021 when dealerships were shut down.
  • In 2024, there will be fewer lease returns because many leases originated during a period of low vehicle sales.
• Impact on Used Car Inventory:
  • Used car inventory is primarily sourced from vehicles sold two or three years prior.
  • The most common lease term is three years, so vehicles leased in 2021 are not returning to the market in expected volumes.
• Market Trends:
  • The late-model used car market is anticipated to be slim for the next 12 to 18 months, potentially leading to higher prices for used cars.
  • Owners who purchased cars in 2021 are likely to keep them longer, further reducing the availability of late-model used cars.

Future Outlook:

• According to JD Power, used vehicle supply is not expected to return to 2023 levels until the end of the decade (approximately 5-6 years away).
• Consumers should consider keeping their current vehicles longer or looking into new car options, as the price difference may be negligible.

Advice for Listeners:

• With high interest rates continuing, it's essential to plan ahead if vehicle replacement is needed in your family.
• Explore your options and consider how the market may change over the next few years.

Additional Resources:

• For personalized guidance, check out actualhuman.com for live one-on-one private video consultations with experts on this topic.

Conclusion:

• If you found this information helpful, explore more videos on our channel for additional insights to assist you in navigating your automotive needs.

What is The Expert Podcast?

The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.

There is a hidden crisis about ready to hit the automotive retailing industry, and it's related to the pandemic even though that's been over for years. The reason is there will be fewer lease returns and fewer used cars for that matter. Remember back in 2021 and 2020 when dealerships were shut down for the pandemic? There weren't as many cars sold or leased. Remember, used cars? The used car inventory doesn't come from a used car factory; it comes from vehicles that were sold two or three years ago now coming back into the marketplace.

If you had a three-year lease on a car, which is the most common lease term in 2024, leases that are coming due were put out in 2021. In 2021, there were much lower volumes of vehicles sold and leased. So if you're a dealership, you normally would have a big off-lease pool of vehicles that you can draw from. In 2024, you're not going to have that pool, which means used car inventory is going to be very difficult to come by. People who bought cars in 2021 didn't lease them; they bought them. There were fewer cars sold that year, but also those people may keep them longer than before.

So it's likely that the late model used car market is going to be very slim for the next 12 to 18 months. What is that going to mean for the industry? Well, automakers will have a challenging future, and leasing rates fell from 1 and 3 to 1 and 6, half the number, and certified pre-owned cars will see a reduction in supply because there's less of them.

What's that going to do for prices? Well, prices might go up on used cars again. That might make it difficult if you're in the used car market. It might also be a good time to look at a new car versus a used car. How long is it going to last? Well, according to JD Power, one of the largest automotive consultants, the used vehicle supply won't return to 2023 levels until the end of the decade. That's five to six years away. So if you're looking at the car market this year, next year, or down the road, you might want to hang on to the used car you have if it's a nice one or consider a new car that might not be much different in price from the used car that might be in the marketplace.

Interest rates are still going to be high, so if your vehicle inventory in your family is such that you may need to replace one or more of your vehicles, consider what the marketplace is going to be like in the next few years to make plans for which car to consider and which car to buy or which car to keep. If you found this video helpful, be sure to click on other videos on our channel to see if there's further information that could give you more insight into resolving your particular situation.