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COVID-19 : Used Vehicle Update

Used Vehicle Dealer Status. Source: DesRosiers Automotive Consultants Inc. & UCDA.

DesRosiers Automotive Consultants has been working continually in recent months to track the impact of the current pandemic across all sectors of the automotive market in Canada.

Working closely with the Used Car Dealers Association, DesRosiers Automotive Consultants reached out to used car dealers to track the progress of their business and the recovery from the market collapse of the spring. The most recent survey was conducted between August 4-11 and received responses from close to 600 used car dealers.

With lockdown restrictions being loosened across the country, used car dealerships have proceeded to break out the car polish and reopen their doors. While only 13.9% were open for their regular hours in April, by July 48.3% had flipped their welcome sign around and were open regular hours.

 

Change in used sales volume. Source: DesRosiers Automotive Consultants inc. & UCDA.

While this still leaves more than half the stores at less than regular hours it is a huge step forward from the spring. Complete closures of used car stores have fallen from 42.1% in April to just 5.0% in July.

Dealers have been experiencing a steadily improving sales situation in recent months. In July, as consumers released pent-up demand, nearly forty percent of surveyed dealers indicated sales volume growth compared to the previous year.

However, 21.1% indicated a sales decrease of 1-25%, 23.4% indicated a decrease of 26-50%, and 15.9% indicated a decrease of 51-100%. Comparatively in April, used car dealers indicated that their sales volumes had dropped with the majority (54.8%) indicating a decrease of 76-100%.

For the year overall, close to 80% of dealers expect the market to be down from 2019, with the largest segment of dealers, 32.4%, expecting total sales to decrease 1-25% in 2020.

Outlook on used sales change. Source: DesRosiers Automotive Consultants Inc. & UCDA

With regard to used vehicle prices, the majority of dealers (68.6%) saw price increases of varying degrees in July. A shortage of vehicles traded in during the spring months has led to supply – demand mismatches in the market pushing prices higher. This is also reflected in vehicle sourcing patterns for dealers in July, with the great majority of dealers indicating challenges in sourcing some or all vehicles. Indeed, just 9.5% of respondents noted no difficulty whatsoever in sourcing vehicles.

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