Will the Hot Used Car Market Lead to Burns?

Key Insights:

1. Dealerships are acquiring more inventory than they are selling. Used vehicle stocking levels have moved into the positive territory compared to Q4 last year.
2. Days supply has increased by approximately 11 days since then.
3. Although PVR has remained strong, there is increasing stress in the markets. Whereas dealers made far fewer markdowns in January, they have resorted to increasing the size of markdowns to move inventory.
4. The overall ramp up of prices has increased by $2,000/unit since mid-December during a trend of softening demand, whereas distressed inventory is being discounted $3,000.
5. LotLinx’s proprietary index of days-not-seen (VINVisibility) has steadily decreased since December, indicating more vehicles are being seen each day on dealer websites but more are staying on the sidelines.

Savvy Dealers Should Consider Taking Control:

• Adjusting Used vehicle prices to late January levels
• Assure adequate exposure on each car in inventory to avoid the “not-seen” trap