The used car market has expanded rapidly in the past few years, both in the U.S. and on a global scale. Market research firm Mordor Intelligence has predicted a Compound Annual Growth Rate of 12.81% between 2018 and 2024. Used passenger vehicles also now represent 35% of all those exported by the U.S. to other countries.
The current trends in the used vehicle market can provide insights into what to expect in 2020. Here are some of the latest trends worth considering.
A Drop in Supply Levels
The number of off-lease vehicles coming back to the market is expected to remain stable or decline slightly over 2019. Lease maturities are expected to remain flat. With record loan volumes and high delinquency rates, repossessions are expected to rise. J.D. Power forecasts only a slight decline in vehicles up to five years old returning to the market. Marketing firm Cox Automotive projects used vehicle sales to fall from 39.2 million in 2019 to 39 million in 2020.
A Decline in Value
Overall, used-vehicle values are expected to fall 1.5% this year, based on forecasts from J.D. Power. Declining credit conditions are contributing to this forecast. Cox Automotive projects the Used Vehicle Index to be flat to 1% over last year, which would make 2020 the weakest since 2016, although the index is not adjusted for inflation. And as for the seasonal trends in used car values, the decrease this past September was larger than expected.
Continued Demand for Mainstream Cars
Mass-market brands, including used small and mid-size cars, are still in high demand. These vehicles showed the strongest price appreciation in 2019. There’s also a strong demand for SUVs and pickup trucks.
A Continued Mix of Cars and Trucks
Light trucks are expected to have a growing share in the used-vehicle market in 2020. In fact, SUVs, crossovers, and pickups outnumbered cars in off lease returns for the first time in 2019, according to Edmunds, which estimated a lease volume of 2.26 million SUVs last year.
Fragmentation in the used-vehicle market for 2019 was noticeable, and this is expected to remain the case in 2020. Non-traditional retailers such as CarMax (which has a 2% share in the market) and Carvana (which has set a goal that equals a 5% share of the market) are contributing to this fragmentation.
Increase in Foreign Exports
The used car market is increasing significantly in countries like China and India. China has responded to the increase in electric and autonomous vehicles by planning to sell registered used models to countries with lower emission and safety standards. Also, 10 Chinese cities granted permission to export used cars in May 2019. A Chinese company in Guangzhou recently exported close to 300 used cars, while the import-export business has been strong in Europe.
In India, the used car market is expected to grow. Used car sales are outpacing new car sales and the ratio is expected to increase. The Goods & Services Tax rate on used cars was also revised to a more favorable rate. The value proposition, as new cars become more expensive, is another factor supporting growth in the Indian used car market.
Shop for Used Cars at Hawthorne Auto Square
If you are in the market for a used vehicle, visit Hawthorne Auto Square in person or online. We have hundreds of top-brand, multi-point inspected vehicles and can approve you for financing in minutes, regardless of your credit. Feel free to call our sales team at 866-707-7664.