Dealers and Consumers Will be Contending With a Flood of Used Cars in Upcoming Years

Used cars are making a comeback in the U.S., and even more growth is expected over the upcoming years. According to multiple industry experts, such as Automotive News, a “used car flood” is on its way to auto dealerships. The “drought” of used cars is finally over, and predictions indicate a boomerang is in effect.

Manheim projections forecast that about 2.1 million off-lease vehicles will hit the market this year — this is up from 1.7 million in 2013. This number is expected to hit 2.5 million in 2015, then take off running in 2016 with more than 3 million used vehicles waiting in car lots.

The news is welcome for both dealers and car buyers alike. For dealers, it means less of a struggle to find reasonably priced vehicles during a fairly dry market. More vehicles, more sales. For buyers, the greater supply is going to equate to lowered prices. As more people open up their purses again and look for different cars, they’re going to have a lot more to choose from.

On the other hand, new-car buyers looking to trade in their old cars will have to deal with the downside of greater supply — less offered cash for their trade ins. There will also be an impact on the price of monthly lease payments. These are usually lower than loan payments for purchasing a car because the vehicle’s residual value is deducted from the monthly payment. If used cars are bringing in less money, though, this will mean higher leases.

Industry studies indicate that every 1% increase in car interest rates reduces new-car sales by 300,000 units. In anticipation of this, automakers are preparing accordingly.

“There is a tsunami of lease returns coming to us, and we have to be really, really well prepared,” says Fred Diaz for Nissan North America. “[We’re] putting the final touches on what that strategy will be.”

The Hudiburg Nissan Used Car Supercenter in Oklahoma, OK has followed suit.

“In anticipation to the rising marketplace, the Hudiburg Nissan Used Car Supercenter has freshly constructed a larger facility to accommodate the increasing number of consumers,” says Greg Brooksher, Used Car Director. “We are now equipped to double our inventory so that our customers can find precisely the vehicle they are searching for and at a price that they cannot refuse.”

Another factor impacting the flood of used cars is the fact that cars simply have a longer lifespan than they used to. Edmunds estimates that in 2014, used-car prices would overall be falling 2% as a result of all these factors.

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