It looks like 2011 is shaping up to be a good year for used car sales, in spite of the dire predictions that there is no supply and used car prices are going to shoot through the roof but consumers should be concerned by an increasing use of mobile websites.
That doesn't help to explain the strong sales numbers that have been seen on both the new car and used car side. Some analysts are predicting that 2011 could end with new car sales of almost 14 million, which means used car sales could easily peak 40 million - and this at a time when the naysayers have been claiming that used car sales are suffering from a supply problem.
According to TrueCar.com, which has become a great source of information on the new and used car markets, Used car sales are estimated to be 2,614,847, up 1.4 percent from November 2010 and down 4.6 percent from October 2011. The ratio of new to used is estimated to be 1:3 for November 2011. TrueCar gets its numbers from franchised dealers, private sellers and used car dealers.
There's an interesting trend coming down the road that could have an impact on the used car market. Potential buyers are setting aside more money for their used car purchases, according to CNW Research, which is going to mean one of two things: used car buyers are going to realize they have enough money for heavily discounted new cars, which is going to drive down used car prices or they will pay bigger down payments on their used cars, which is going to hurt dealers somewhat and eventually drive down used car prices.
Used car prices are going to drop (or remain steady) as more people buy new cars because used car dealers are going to have to become more aggressive in selling and buying practices. Their best way to lure customers to the lots is via lower used car prices.
Used car dealers are also going to have to recover from customers financing less of their purchase price because of higher down payments. That leaves the dealers handcuffed when it comes to the money they can make on loan commissions. They're going to need to increase foot traffic to attract more people in the hopes not all will have money set aside for bigger down payments.
You see the constant? That's right - lower used car prices (or used car prices that don't increase and that's a de facto drop, especially if new car prices increase in the same time frame). It demonstrates that the used car market is going to become more rational in its pricing structure, a trend that has been demonstrating itself the last few months.
There is one trend that is going underreported as 2011 starts to come to a close in the used car market: mobile used car information. All of the major websites like KBB.com</>, Edmunds.com and now CarFax are hyping their mobile web pages that work well on smart phones and provide instant access to pricing information on used cars. Mobile web pages could end up being a boon to the used car industry.
How so? Because customers are going to feel over confident when they think they have all the information necessary to buy a used car right at their fingertips. The problem is they're not going to digest the information and end up paying more for their used cars.
Disturbing Used Car Trend?
Expect in the near future for more used car dealers to have tablets available to potential customers that link them to mobile websites that provide byte after byte of information. Customers will get so much information that they'll become overwhelmed and their eyes are just going to glaze over and they will completely loose focus on the transaction.
The mobile web page could be the single thing that helps savvy dealers turn around and start making more profits from their used car sales. Sure, 2011 is shaping up to be a strong year for used car sales with supply abundant and prices leveling off as the end of the year approaches. Look to 2012 to see the pendulum swing back to dealers as they avail themselves of more and more technology.
