Latest News

10 Hot Topics & Trends to Watch for in 2016…

30-Dec-2015

Record certified used-vehicle sales. Strong used-vehicle prices, even amid rising inventory, the result of increases in both off-lease vehicles and trade-ins. Expanding auctions. 
It was a booming year in the automotive remarketing world in 2015. Here are 10 topics and trends to watch in 2016.
1. CarMax When it comes to retail used-vehicle sales, CarMax rules the roost. No other retailer even comes close. It had 153 stores in 77 markets at the end of November and retail sales of a record 582,282 units in its fiscal year ended Feb. 28. In the March 1-Nov. 30 period, its retail used sales rose 7.3 percent from a year earlier. 
How big can it get? CarMax opened two stores this month and plans to add 14 more by Nov. 30, 2016.
2. CarMax challengers Sonic Automotive, with its EchoPark stores, and Asbury Automotive, with its Q auto dealerships, have launched challenges to CarMax on the used-only store front. So far, though, there are just three EchoPark stores, with four more planned for 2016. In February, Asbury said it would not open more Q auto stores in 2015 while it worked to move its three existing stores into the black. Their success -- or lack thereof -- could inspire others to jump into the used-only space -- or scare them off.
3. Disrupters Not since the dot.com boom went bust has the industry seen so many newcomers vying to change how used cars and trucks are bought and sold. 
Don't be fooled by the cutesy names: Beepi, Carvana, Vroom. They are potential rivals -- or aids -- to dealerships' used-vehicle operations. Their business models vary. Some serve only consumers. Others also offer services to dealerships by helping stores unload aging inventory or source vehicles from individual sellers. But all promise consumers vehicles that are inspected, reconditioned and delivered to customers with a money-back guarantee if they are not satisfied. And they all bypass the traditional dealership experience. 
Most of the newcomers are still highly localized, and none has emerged as the clear leader in this group -- yet. 
4. Supply More used vehicles keep coming to market. U.S. new light-vehicle sales are expected to rise again in 2016, though at a slower pace, to more than 17 million units, bringing more trade-ins. And off-lease vehicles are poised to boom. The number of vehicles coming off-lease in 2016 will jump by almost 800,000 units in 2016 vs. an increase of just 95,000 in 2015, J.D. Power and Associates estimates. 
5. Demand Pent-up customer demand, a carryover from the recession, is fading in the rearview mirror. Low interest rates just got a bump, though they remain almost laughably below historic levels. Automakers may be tempted to offer incentives on their new vehicles, as 2016's sales grow at a slower pace than in prior years. That could tempt used-car shoppers to walk over to the new-vehicle side of the showroom. 
Add it up, and demand for used vehicles may well soften -- or not. But the supply-demand equation will be what determines the outlook for the next topic on this list: 
6. Used-vehicle prices In 2015, strong consumer demand, especially for pickups and crossovers, and low interest rates helped keep overall prices higher than forecasters had expected. 
Now forecasters are back with dire data on the volume of off-lease vehicles ready to hit the market and other reasons why prices should slip. Will they be wrong again? Avoiding the trap of buying high at auction and selling low at retail will remain a concern for used-car managers. 
7. Certified used vehicles Certified used-vehicle programs -- fed largely by off-lease vehicles -- are vital to helping prop up used-vehicle prices. Through September, sales of certified used-vehicles made up a record 22 percent of used-vehicle sales at franchise dealerships, according to the "Q3 2015 Used Vehicle Market Report" released by Edmunds.com. That's a percentage point higher than the same time last year. CPO sales typically spike in December, so expect that figure to climb. 
On an absolute basis, 2015 is guaranteed to see a fifth straight record for certified sales. With automakers supporting CPO programs as a way to soak up their off-lease vehicles, expect another record in 2016.
8. Leasing Leasing as a share of new vehicles retailed stood at 27.8 percent for the first nine months of 2015, NADA Used Car Guide said, citing data from J.D. Power's Power Information Network. That is up from 25.7 percent in 2014 and a massive jump from a low of 13.5 percent in 2009. 
On a short-term basis, what happens in new-vehicle leasing in 2016 won't have a huge impact on the remarketing world. But prospects for off-lease vehicles in 2018 and beyond will drive decisions on whether to expand used-car operations, auctions and so on. 
9. Auction consolidation Consolidation is spreading in the auction world just as it is in car dealerships. Large and medium-size groups are buying stand-alone auctions. ADESA, the nation's second largest auction company, for example, acquired an auction site in Pittsburgh and has identified five to 10 independent auction houses that it will pursue if they become available. Ben Lange, CEO of private-equity backed America's Auto Auction, says a lot of "people with money are looking intensely" at auto auctions as possible investments.
10. Manheim moves? In 2015, Cox Automotive, the parent of the nation's largest auction company, tied up with Uber, bought Dealertrack, started prepping vehicles to be front-line ready for EchoPark and other dealerships and reorganized Manheim into two groups to serve, respectively, larger and smaller customers. Cox boss Sandy Schwartz seems determined to keep experimenting. 
Don't expect 2016 to be a year for Cox -- or the industry -- to settle into an easy chair.
Thank you;  Arlena Sawyers

Have Questions? Let Us Know!

Contact Us Today!