CPO vehicle sales show dramatic gain from April

CARY, N.C. – 

Amid the recovery in the overall used-vehicle retail market, the certified pre-owned segment was an especially bright spot in May.

According to a Cox Automotive analysis of data from Motor Intelligence, there were 237,495 CPO sales for the month.

While that’s down 6% from May 2019, last month’s certified sales tally is 87% stronger than April’s, Cox said.

What’s more, that year-over-year decline in May is a substantial improvement over the 46% year-over-year decrease in April. In March, certified sales were down 40% year-over-year, according to the Cox analysis of Motor Intelligence data. 

That followed what was another record start to the year. 

The first month of 2020 was the strongest January for the certified pre-owned market in a decade, according to a previous report from Cox covered in Auto Remarketing. February then beat those sales by 10%.

Year-to-date sales CPO are at 977,333 units, a 16% decrease, according to latest analysis.

More than two-fifths (44%) of those sales are from Toyota, Honda, Chevrolet, Ford or Nissan, Cox said. A third come from Toyota, Honda or Chevrolet, with those brands representing the largest players in the CPO market, according to the analysis.

Overall used-car sales

There was a 22.4% year-over-year decrease in overall used-vehicle sales for May, with new-car sales falling 30%, Cox Automotive said.

The company estimated the overall used-vehicle SAAR for the month at 32.0 million. In May 2019, it was 39.2 million, and in April, it was 27 million

What Cox considers to be the retail used-vehicle SAAR (or sales by franchised and independent dealers only) was at an estimated 16.7 million last month. In May 2019, it was 21.0 million. In April, it reached 14.4 million.

“Overall, used-vehicle demand continues to improve, which has helped stabilize wholesale vehicle prices and reduce the excess supply of used vehicles,” Cox said in the report. “The wholesale used-vehicle supply peaked at 149 days on April 9, when normal supply is 23. It was down to 39 days by the end of May.”

Over at J.D. Power, analysts were noticing similar trends. In a webinar Thursday on the weekly J.D. Power Auto Industry Impact Report, analyst Larry Dixon said: “Used-vehicle sales at franchised dealers have been robust for several weeks now. May closed with used retail sales down just 5% from our pre-virus forecast for the month or 15 percentage points better than new-vehicle sales.

“Sales in several major markets have especially strong, including Dallas, Phoenix, Cleveland, Denver and Tampa,” said Dixon, who is senior director at J.D. Power Valuation Services.

“Dealers in these markets will need to replenish used retail inventory, which will in turn, help support wholesale auction activity and wholesale prices,” he said. 

In comments included in an emailed summary of the report’s highlights, J.D. Power vice president of data and analytics Tyson Jominy wrote: “The strong demand for used vehicles is consistent with prior periods of challenging economic conditions.

“Less compelling incentives on new vehicles will further bolster demand for used vehicles and a significant number of households who would have purchased a new vehicle are switching to the used market due to affordability concerns,” Jominy said. “Reduced new-vehicle incentives will also remove a headwind to the maintenance of strong used-vehicle wholesale and retail prices.”

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