Used car demand rapidly outpaced other segments in March, resulting in the highest retail sales volume in two years.
According to Cox Automotive, dealers sold a combined 1.66 million used cars in March, up 18.5% month-over-month and 10.9% year-over-year. This massive spike dragged preowned days’ supply down to 44 days despite an increase in general inventory levels observed over the first quarter.
While demand for used vehicles typically climbs in early spring, last month’s numbers reflect the highest sales totals for the preowned segment since March 2022. They also represent a dramatic recovery from the prior-year period when the sudden revival of automotive manufacturing sapped demand from the preowned market.
Used car prices have played a vital role in this resurgence. “Affordability matters more than ever to consumers, and declines in used-vehicle prices help offset higher interest rates,” writes Jeremy Robb, senior director of economy and industry insights at Cox Automotive. “Once tax return season got underway, many consumers had more income to use as a down payment, driving customers into retail dealerships.”
Conditions in the new vehicle segment have also driven consumers to purchase more used cars. While affordability is making a slow return to the new car landscape, the pace has been so slow that a current-year model still costs far more than most buyers are willing or able to pay. With nowhere else to go, the pent-up demand created by multiple years of unaffordable pricing is spilling over into the used vehicle market.
However, while sales gains are a net positive, dealers may need to prepare for a further shortfall in used car inventory. Supply levels have been suppressed for several years due to many drivers keeping their vehicles for longer periods of time. With preowned sales starting to lift, retailers may face even less inventory in the days ahead. Multi-channel acquisition strategies, which pull vehicles from multiple sources rather than a single wholesale supplier, can help dealers navigate these headwinds in the coming months.
