— The growth in new vehicle sales continues to drive the long-term outlook in the used vehicle market according to a Global Vehicle Remarketing (GVR) annual report released on February 1 by ADESA, Inc. Analytical Services.
The report, which provides a detailed look at long-term trends in the North American vehicle remarketing industry, shows that new- and used-vehicle sales in the U.S. and Canada continued at a good clip in the year just ended. The report also predicts that wholesale used-vehicle auction volumes in North America are expected to grow by over one million units over the next five years.
“New-vehicle sales continue to exceed vehicle retirements, resulting in more vehicles on the road,” said Tom Kontos, vice president, Industry Relations & Analytical Services for ADESA Corporation. “Because of this, and because vehicles tend to cycle in the market at predictable levels approximating one in five units, we have seen used-vehicle sales steadily grow as well.”
The growth of vehicles on the road was one of the primary drivers for an increase in wholesale auction volumes from 8.7 to 10 million units between 1998 and 2003,” Kontos continued. “In spite of a downturn in supply from off-lease vehicles, the wholesale auction industry was able to make modest gains by increasing dealer consignment sales. An important demand component of these sales came from independent used-car dealers, who had a record year in 2004.”
The study also notes that auction volumes reached their highest levels ever, although the growth between 2003 and 2004 was modest due to the loss of off-lease volume.
The “Major Sources of Supply” section in the GVR study concludes that dealers will be the primary source of auction volume growth in the coming years, as off-lease volumes continue to decline (albeit less dramatically than they did in 2004). The report also predicts that:
Dealers who take advantage of auctions as an extension of their inventory management system will generally be justly rewarded with quicker inventory turns and improved profitability.
Manufacturers are expected to continue to provide steady volumes of program and company vehicles to auctions in support of the auto industry’s new-vehicle sales efforts.
Off-lease volumes will continue to fall, albeit at a milder rate, through 2007. Off-lease volumes returning for wholesale remarketing in the U.S. fell from an estimated 1.9 million units in 2003 to 1.4 million units in 2004.
Off-rental units and commercial fleet vehicles are expected to supply steady volumes to the remarketing industry in the coming years, recovering from their post 9/11 trend.
Growth in the percentage of insurance claims that result in total loss should assure steady growth in salvage auction volumes.
The GVR report also contains information on the small but growing role of Internet remarketing and insightful case studies from ADESA Analytical Services’ projects conducted in the past year for ADESA clients.
ADESA Analytical Services publishes the annual report, Global Vehicle Remarketing and the periodic Pulse report. These publications cover the $83 billion vehicle remarketing industry and the $350 billion used-vehicle market in the U.S. and Canada. Copies of these reports may be obtained by contacting ADESA’s Industry Relations and Analytical Services department at 1-800-923-3725, extension 4251.