Art Spinella of CNW Market Research has summed up used car sales in June. His research proves there are more used car shoppers in the market but used car prices continue to drop while used car inventory keeps increasing.
As previously reported, CNW Market Research in Bradenton, Ore., is one of the top sources for information on the used car marketplace. Spinella is one of the industry's top analysts.
He said, "A late month surge in used-car shoppers and buyers in the franchised and private party channels put the used-car market well above mid-month projections, up 2.45% to 4,489,731." Here's how it breaks down:
- Franchised Dealers: Up 3.35% vs. a year ago.
- Independent Dealers: Up 3.82% vs. a year ago.
- Private Party Sales: Down 0.46% vs. a year ago.
This next fact from CNW Market Research demonstrates how topsy-turvy the used car market has become. According to Spinella, the total value of used cars sold slipped 3,2 percent to $40.2 billion compared to last year's $41.5 billion because of lower transaction prices. He added, "Transaction prices across all three channels were down 5.5 percent to $8,955 from $9,477. That figure excludes aftermarket products, taxes, fees, etc. It is just a reflection of how much the vehicles sold were."
More used car vehicles are being sold, which is indicative of pent-up demand when you consider almost 4.5 million used cars were sold in June 2013. But, and here is where things get topsy-turvy, the supply is more than meeting the demand and that's why prices are dropping.
Spinella confirms there are more shoppers in the used car marketplace. He said, "We saw a 3.8% increase in the number of used-vehicle shoppers in June '13 vs. June '12."
It breaks down this way:
- Franchised Dealerships' Shoppers: Up 3.77%
- Independent Dealerships' Shoppers: down 26.81%
- Private Party Shoppers: Up 16.68%
Here's a statistic that could be considered troubling from a consumer protection point of view but it could also be perceived as good news. According to Spinella, the typical used-car buyer searched for a vehicle for 3.9 weeks before acquisition, down 10.64% from last year's 4.4 weeks. That could be a troubling statistic if it indicates used car buyers are rushing into their purchase decisions. However, it's good news because it means there is increasing supply for buyers, who can find what they are looking for more quickly.
There was a 7.4 percent increase in the number of used vehicles that were financed compared to last year: 3.0 million vs. 2.79 million, according to CNW Market Research. Craig Fitzgerald, publisher of ClunkerNation.com, has an interesting perspective over at CarTalk.com on not financing used or new cars from his personal experience. He makes some valid points on financing vs. buying with cash.
Of those vehicle financed, there was a 20.6% decline in the number of buyers who had a pre-approved auto loan when making the acquisition, according to Spinella. That's a big mistake because you should always have your used car financing arranged ahead of time to make the sales process a lot less complicated and more transparent.
It's getting easier to get credit, which isn't always a good thing. People tend to buy over their heads when financing because they look at the bottom line of monthly payments vs. the true cost of financing a used car. The number of sub-prime buyers skyrocketed by nearly 35.6% to 1,018,845 individuals from last year's 751,143. In the Deep-Subprime market (FICO under 550), CNW data shows a 41.26% increase compared to last year.
Shoppers are visiting dealerships because of the Internet in larger numbers with a 131% increase vs. last year. This could point to troubles for independent dealers but it also means used car buyers would be smart to specifically search websites of independent used car dealers because others may not be finding the in search engines.