With new-vehicle affordability continuing to challenge many consumers, more of them may turn to the used-vehicle market.
“The fundamentals remain solid; used-vehicle demand is at a peak,” Jonathan Smoke, chief economist at Cox Automotive, said in a conference call for the Manheim Used Vehicle Value Index. “Wholesale supply is now post-peak and starting a gradual decline.”
Tax reform generally helped consumers keep more of their income, and that helped spur both new and used demand last year. The effect on 2019, however, is in question: Smoke has warned that insufficient withholdings may leave many filers unpleasantly surprised by lower returns. “At this point this is a major concern for the first quarter and could have economic implications for the rest of the year,” Smoke said.
Still, Smoke noted, “the used market is the answer for the affordability challenges in the new market.”