In these unprecedented times, we’re inspired by how the automotive industry is coming together to get through the crisis. People and companies around the country are doing their part to help any way they can.
As a data company, one of the ways we can help is to share market trends and insights. The hope is that this helps dealers and partners manage their businesses today and plan for what’s to come.
Note: due to a bug in Google Sheets, the interactive charts are blank on mobile. We recommend viewing this article on your laptop/desktop browser.
Questions to answer
The biggest question we set out to answer is how COVID-19 and the lockdowns are impacting the used car market. Are prices increasing or decreasing? Are dealers buying more cars to keep lots full, or are they holding off? How quickly are cars moving in the markets most impacted by COVID? How does all of this compare to last year?
To answer these questions, we pulled two data sets. The first spanned the US and includes approximately 27,000 dealerships accounting for 2.3 million used vehicles in both 2019 and 2020. We broke this data set down by DMA. For each DMA/City, we ended up with roughly 3,000 dealerships and 285,000 used units.
In a healthy market, the number of new vehicles coming onto a dealer’s lot tends to equal the number being sold. But what happens when a pandemic forces dealers to shut their doors or reinvent how they sell? How does the eroding wholesale market affect retail acquisitions? By looking at the daily acquisition and sales rate we can get a good picture of the impact.
First, we’ll start with a national view. As you can see from the chart below, outside of some seasonality spikes the daily inflow and outflow is steady. That started to change on March 7th with sales dropping. The drop in acquisitions didn’t start until 10 days later. And while we are starting to see a slight uptick on both fronts, it’s still too early to tell if it is noise or a trend.
April 24th Update: In the last seven days we’ve seen a strong break between the number of cars being sold vs those being acquired and added to a dealer’s lot. In the case of New York City, they appear to be a steady-state for now, with no upward or downward swings
May 8th Update: Used inventory sales and acquisitions have been steadily improving – with sales reaching ~1% and new acquisitions sitting at .75%. Dealers are working hard to move the current inventory they have and are being cautious with acquiring vehicles to replace those being sold.
Next, we wanted to examine New York City, the hardest-hit area of the country. As you can see in the chart below, the trend is identical. However, the impact is more severe. We see a 75% drop in sales since February 27th. Acquisitions fell faster and even more severely, dropping 80% over three weeks. Here again, we are starting to see an upward movement, but it will take another few days to know if this is a trend.
Except for San Francisco, strong February sales drove a drop in inventory counts across the cities most impacted by COVID to date. When you look at the year-over-year trends, you’ll notice the same pattern. Across these cities, inventory counts are increasing, except for Seattle. On March 19th, we started to see a drop in units.
April 10th Update: In the last seven days inventory levels have been rising sharply, with the exception of New Orleans, pointing to a sharp decline in sales.
April 24th Update: Nationally, and across all of the DMAs we examined, inventory levels are either decreasing or holding steady.
May 8th Update: Used inventory levels continue to fall across the individual DMAs. This has been on a steady decline over the last week.
Relative to a January baseline, 2020 has tracked reasonably close to 2019 levels until early March. This trend is one we’ll continue to monitor and report on.
May 8th Update: This time last year we started to see inventory levels build up but this year it appears dealers are being understandably cautious.
2020 got off to a better start compared to last year with the median age of used inventory tracking below or at 2019 levels. However, around the middle of March, age started to flatten out around 32 days and began to rise on the 21st. Compared to last year, we would expect an increase but then a quick turn around in the first few weeks of April. We’ll continue to update the data to see which direction this heads.
April 10th Update: As expected, the median days on lot is also rising, although New Orleans is starting to plateau. Age has been increasing in lock-step with each new day, but the growth rate does appear to be slowing slightly.
April 24th Update: It appears that the median inventory age of units on dealer’s lots are finally starting to flatten, although another week’s worth of data will help us know for sure.
May 8th Update: With the limited sales, the average age of inventory continues to rise. While it appeared ages were leveling off last week, that trend didn’t hold and we are sitting at a median of 52 days on lot. Last year at this time the median was 33.
When we drill down to the DMA level, we notice the same trends we see nationally. While it’s still early, Seattle and New Orleans show a slight drop in age over the last few days.
Across the same six DMAs, median prices are all higher in March compared to February. This behavior mirrors precisely what we saw last year at a national level. Note that both datasets only looked at sub $50,000 vehicles.
April 10th Update: Nationwide prices are holding steady and while we do see some variations at the DMA level, they aren’t significant.
April 24th Update: After holding steady for the last few weeks, the median price of used vehicles under $50k is starting to drop. This trend is clear at a national level and we see the same behavior across major DMAs, with the exception of Seattle.
May 8th Update: After a week of steady declines for all vehicles under 50k, the median price has held steady over the last few days. We are $500 off from the high in March and the high from last year around the same time.
Vehicle prices by band
With so many vehicles falling into the sub-$50k segment, we decided to analyze retail prices at a more granular level. In the charts below, we’re tracking the median price of eight different price segments. Vehicles priced between $35-40k saw the lowest drop, falling nearly $2,000 since the start of the year. Vehicles in the $15-20k range only fell by $508 and leads the way across all segments. While the sub $15k segment only fell by ~$600, on a percentage basis they are one of the worst three performing segments.
May 8th Update: Looking at the median price by price band tells a different story. Sub $15k and $15-20k cars are holding steady while all other bands are dropping. These two segments also represent the highest volume of units in inventory.
Next, we wanted to see if dealers were changing their pricing patterns, so we analyzed the average absolute value of daily price changes.
While we didn’t see any deviations in vehicle prices, we did notice a shift year-over-year in price changes. Last year at a national level, the average price change increased steadily in the middle of March through the beginning of April. However, in 2020 we see a different pattern, the average price change dropped steadily in the middle of March, only showing a slight uptick in recent days.
April 10th Update: The average price change continues to decline in stark contrast to this time last year. With sales dropping, dealers are acquiring fewer vehicles. With less new inventory coming onto the lot this appears to drive fewer and lower price changes.
April 24th Update: Over the last week the average price change is holding steady. One exception is in Detroit, where we see a steady increase.
May 8th Update: After a week of holding steady, price changes are picking up again.
At a DMA-level, we start to see some divergence from the trends. In New York City, we see a considerable spike beginning on March 18th and then a trend downward beginning on the 26th. Seattle mirrors New York City, except their spike started on March 13th. Meanwhile, San Francisco didn’t show much deviation at all, with their price changes holding relatively steady throughout all of 2020.
New car inventory levels
A lot of analysis has already been shared on new car sales. Our partner, JD Power, in particular, has some terrific data. One thing we wanted to add to their analysis is a tracker on new car inventory levels. We know OEMs have shuttered many of their plants, new car sales are down, and as expected, we see inventory levels rise.
Last year at this time, new car inventory levels were 105% higher than the first week of January. This year, the number of units today sits at 108%. At a DMA-level, we see the same trends. New car inventory levels are up significantly from the beginning of the year, and the trend line doesn’t appear to be flattening.
April 10th Update: In the last seven days the average new car inventory levels nationwide are holding steady. This is another indication of lower sales as factories are shut down so there is limited new inventory appearing on dealer lots. While the growth rates at the DMA levels below showed a steady increase relative to week 1, we are starting to notice some downward trends.
April 24th Update: Over the last week we are seeing a steady decline in new car inventory levels. This trend is appearing nationally as well as across the DMAs we’re tracking.
May 8th Update: Not surprisingly new car inventory levels are dropping, and dropping fast. The combination of sales picking up and the inability to get new units is driving this change.
We sincerely hope you find this analysis helpful. Our Data Science team is monitoring the situation closely, and we will continue to update these charts and share new insights as we find them.
If you have suggestions or questions, please post them below and we will do our best to address them in follow-on updates.
In the meantime, please follow us on Social Media to get the latest updates and bookmark this page.
There are a lot of great companies putting out their own data on this topic. Here are the ones we’re following and we’d encourage you do check them out.
- JD Power Weekly COVID Impact Webinar
- Dealer Inspire’s COVID Impact Blog
- DrivenData’s COVID Impact Page
- LotLinx COVID Market Analysis
- Foureye’s Sales Tracker by State
- Manheim’s Daily MMR Tracker
Let us know if you have other sources to add to this list.