Of the record 58.6 million new and used vehicle sales that took place in 2000, 41.1 million, or 70 percent, were used-vehicle transactions, and with indications of a slowdown of the red-hot economy in 2001, the used-vehicle market is expected to account for a larger share of that activity in the year ahead, according to Manheim Auctions’ 2001 Used Car Market Report (UCMR).
The report, released Feb. 3 at the National Automobile Dealers Association (NADA) annual convention in Las Vegas, is the sixth edition of the annual comprehensive study of new and used vehicle sales and auction activities.
According to the report, the total value of new and used vehicle transactions in 2000 reached a record of $744 billion. Despite projections of a drop in new-car sales of at least one million units this year, the used-car market is not expected to suffer such a hit. Strong new-car sales for the past seven years, plus the reduced scrappage of older units (i.e., vehicles staying on the road longer), have increased the vehicle population and moved many units into the prime age of trading.
“For the last several years, both the new and used sides of the automotive business have benefited from the strong economy,” said Tom Webb, Manheim Auctions’ chief economist and author of the report. “If the projections for a softening economy are indeed true, we’ll see the used vehicle side take on even more importance. Traditionally, when times get a little tougher, the focus -- for dealers and consumers alike -- moves to used cars.”
Other highlights of the UCMR include:
o After years of continuous increases, there was a 2 percent decline in overall off-lease volume in 2000. The number of off-lease vehicles remarketed through auctions, however, rose by 3 percent, as a wide spread between set residuals and market caused fewer lessees and dealers from buying the units at end-of-term.
o Consumers continue to use the Internet to gather information on vehicles, not to purchase them. On the wholesale side, the dollar value of the online wholesale business has tripled over the last two years, as evidenced by Manheim Interactive Cyberlots, which recorded online sales of more than $1.5 billion in 2000, a 590 percent increase from 1998.
o The percentage of franchised new-car dealers with Web sites increased from 47 percent in 1997 to a projected 95 percent in 2001. Independent dealers with Web sites showed even more dramatic growth, leaping from 11.3 percent in 1997 to 38.6 percent today.
o Both franchised and independent used-car dealers posted record profits in 2000, and those profits should remain relatively stable in 2001. Franchised dealers and independents continue to develop their niches; 87 percent of units sold at franchised dealerships are less than 8 years old, while 61 percent of all sales at independent lots are 8 years old or older.
o The rental car industry saw the biggest shift ever to “risk” vehicles -– those vehicles for which the rental companies assume the responsibility for, and risk of, remarketing. Unit sales of risk vehicles by manufacturers to car rental companies were up by more than 200,000 in 2000, jumping from 28 percent to 38 percent of all such sales.
o The heavy-duty truck industry experienced one of the most tumultuous years on record in 2000, due in large part to skyrocketing diesel fuel prices. In a market that typically absorbs just over 200,000 Class 8 trucks each year, approximately 270,000 such vehicles entered the market in 2000. Estimates are that those numbers will continue to rise until 2003, making it clear that the efficient remarketing of used heavy-duty trucks will be the key to countering the glut.
The 2001 Used Car Market Report relies on proprietary research as well as data from a number of industry resources. The UCMR was originally conceived by ADT Automotive, the auction company acquired by Manheim Auctions last year.
Manheim Auctions has set the standard in the wholesale automobile auction industry for more than 55 years. With locations in the United States, Canada, Puerto Rico, France, the United Kingdom, Australia, and New Zealand, the company is dedicated to helping dealers succeed and to assisting auto manufacturers, fleet and lease companies, and banks sell their used-car inventories efficiently and effectively. The company also offers transaction, reconditioning and certification services, managed remarketing, vehicle transportation, dealer floor planning, retail inspection, and government auction services.
About Manheim Auctions
Manheim Auctions is a wholly owned subsidiary of Cox Enterprises, Inc., with more than 34,000 employees at its 126 auctions and related businesses. It facilitates wholesale and retail used car transactions on the Internet through its Manheim Interactive and AutoTrader.com lines of business. Manheim Auctions’ corporate headquarters is in Atlanta, and its Web site is www.manheimauctions.com.
