Used-car prices bounce back after giving US industry a scare1 min read . Updated: 30 May 2020, 10:50 AM IST
As car auctions were shutting down across the US last month, many in the industry warned of the potential for used prices to collapse.
Used-vehicle prices are bouncing back from last month’s lows and approaching J.D. Power’s pre-pandemic forecasts, a welcome development for ailing automakers and rental-car companies.
J.D. Power’s weekly wholesale auction price index is now down just 1.9% from where the market researcher expected prior to the coronavirus.
Prices have recovered after plunging as much as 16% below the forecast for the week that ended April 19.
As car auctions were shutting down across the country last month, many in the industry warned of the potential for used prices to collapse. The theory was rental companies that were seeing demand dry up would stage fire sales to shrink their fleets and dealers would be reluctant to take on more inventory.
While car renters have indeed fallen on hard times -- Hertz Global Holdings Inc. filed for bankruptcy last week -- sales of used vehicles have held up better than new autos, and dealers are replenishing inventory as auctions reopen. J.D. Power said auction prices may actually surpass its pre-virus expectations in the near term because of relatively robust retail sales.
The trend is encouraging not only for rental-car companies and their creditors but also for automakers and their in-house lenders. Analysts warned last month that General Motors Co. and Ford Motor Co.’s finance companies risked losing billions if auction prices remained weak.
This story has been published from a wire agency feed without modifications to the text.