Somewhere in the middle of all this—I can’t remember when any of it started, or what day it is, or where I live, or who I am, my life is pretty much Memento thanks to the pandemic—a lot of people began to worry that the bottom might fall out of the used car market.
Rental car companies would go belly up, their fleets would flood the market, and used cars would be a dime a dozen. Or so some people thought, mainly used car dealers prone to seeing the glass half empty. And while there was a pretty significant dip in prices for awhile—fairly commensurate with how the rest of the economy fell—none of that really happened in the end, according to new data from JD Power. Used car prices have in fact now returned almost to pre-coronavirus levels.
J.D. Power’s weekly wholesale auction price index is now down just 1.9% from where the market researcher expected prior to the coronavirus. Prices have recovered after plunging as much as 16% below the forecast for the week that ended April 19.
While car renters have indeed fallen on hard times — Hertz Global Holdings Inc. filed for bankruptcy last week — sales of used vehicles have held up better than new autos, and dealers are replenishing inventory as auctions reopen. J.D. Power said auction prices may actually surpass its pre-virus expectations in the near term because of relatively robust retail sales.
Bloomberg doesn’t delve into the reasons why the used car market has rebounded, and it’s possible no one really knows yet, but the fact that used car prices are holding up better than new suggests to me that people who might otherwise buy new are buying used because of economic uncertainty.
And this is nothing more than anecdote, but infrequently my local Honda dealer will call me to make an offer on my Fit. I’ve always assumed they were just marketing exercises, but they did so again this week with a bit more urgency.
“There’s not a lot of used cars out there to buy,” the salesman explained. That also was probably more a marketing pitch but it’s an even stranger thing to say if it’s not somewhat real.