Despite a cooling economy and slump in new-car sales, used-car sales should rise this year, the two largest auto auction groups predicted Saturday.
Leasing will be a major force driving those sales, said ADESA's Tom Kontos, author of "Global Vehicle Remarketing," a study of trends in the U.S. and Canadian auction markets. "It's the drug the American consumer wants to use," he said.
High new-vehicle sales since 1994 plus record sales in 1999 and 2000 have the remarketing pipeline filled with plenty of late-model vehicles, many of which will come off 24-month and 36-month leases in the next few years, he said.
Though dealers will continue to acquire many of their used vehicles from consumers, Kontos' study projects auction sales in the United States will grow from 8.9 million units in 2000 to 10 million in 2005.
"We see significant growth regardless of what happens to new-car sales or what happens in terms of our economy," Kontos said. "These vehicles are going to have to find another home. (But) they may be sold at a price that's lower because of an economic downturn."
Tom Webb, chief economist at Manheim Auctions of Atlanta, the nation's largest auction company, and author of its "2001 Used Car Market Report," expects used-car sales to show a modest increase this year.
In 2000, the number of vehicles coming off lease declined 2 percent but the number of off-lease vehicles remarketed through auctions rose 3 percent, Webb said.
That was because residual values were above market value, and dealers and consumers declined to buy the end-of-term vehicles, he said.
In the United States, wholesale auction sales hit $90 billion in 2000, 15 percent more than in 1999, Webb said.
He also said that he expects modest increases — about 1 percent — in the number of off-lease vehicles and the number of vehicles sold at auction.