The relative low numbers of new vehicles produced during the past 18 months likely will keep prices elevated well into the future, experts told Automotive News. Seasonality, or when the market follows traditional value trends throughout a given year, could still be more than two years away. And even then, the low vehicle production numbers of 2020, 2021 and perhaps beyond will take their toll.
“This late-model used-car shortage is going to be here for years — years — and there’s nothing you can do about it,” Pollak said. “You can’t manufacture late-model used cars overnight. They’ve got to be built, [they’ve] got to be sold, [they’ve] got to be used.”
When new-vehicle production returns to whatever levels become the new normal levels, automakers are likely to supply dealerships first to feed retail demand. Then they’ll turn to the commercial customers. Once those pipelines are filled, it will still take another six to 18 months for those cars to become used vehicles, Pollak noted.
Cox Automotive estimates the industry’s overall supply of unsold new vehicles in August was 1.4 million lower than in the same period in 2020 and more than 2.5 million below where it was at the same point in 2019.
David Paris, senior manager of market insights at J.D. Power, said that in the next year, the typical level of 12- to 18-month-old vehicles is “just not going to be there.”
That vintage makes up a large portion of what dealers tap for used cars and trucks ready for the fronts of dealership lots and that they can sell as certified pre-owned vehicles.
Already this year, the supply of 1-year-old vehicles is down 40 percent year over year, according to J.D. Power.
And in two to three years, there will be significantly fewer off-lease vehicles returning to dealership lots, Paris said.
“Used supply is going to be a huge issue here for the next three years as we kind of work through this,” Paris said.
J.D. Power forecasts that used-vehicle supply will go down in 2022 and in 2023, when it will bottom out, before normalizing or at least turning back up in 2024.