SAN FRANCISCO - Despite an uncertain economy, used-vehicle sales are expected to increase in 2003.
Economic experts at the nation's two largest wholesale auction companies differ on how much sales will rise, but both see a healthy year for used-vehicle sales.
Tom Kontos, vice president of industry relations and analytical services at ADESA Corp. of Indianapolis, predicts that used-vehicle sales this year will reach 44.3 million units, up from a record 43 million in 2002.
Tom Webb, chief economist at Manheim Auctions of Atlanta, says he expects used-vehicle sales will grow to no more than 43.5 million.
"Given the effects of where the economy is now and dealers' reluctance to carry (more) inventory, I see a small increase, less than 1 percent. If we get close to 43.5 million I'd consider that good," Webb says.
Kontos says he based his prediction on year-end 2002 sales by vehicle age, total number of vehicles in operation and several years of record new-vehicle sales.
"We expect a lot of cars cycling out in 2003, and it will generate used cars (sales) at a higher rate than 2002," Kontos says.
Kontos previewed ADESA's "Global Vehicle Remarketing North America" report on Feb. 1 at the National Automobile Dealers Association convention.
At a separate event, Webb released Manheim's "The Used Car Market Report."
The two reports present analysis of the retail and wholesale used-vehicle industry.
Kontos and Webb agree that generous new-vehicle incentives have hurt used-vehicle prices.
"For all of 2002, used-vehicle values as measured by the Manheim Index averaged 2.9 percent below their 2001 level," wrote Webb in the Manheim report.
That report also states that franchised dealers' average used-vehicle profit is the same as the new-vehicle profit - $1,550.
But given that the selling price of a used vehicle averages about $14,000, compared with $26,000 for a new vehicle, the gross margins are significantly different - 11 percent on used compared with 6 percent on new.
Also at the Manheim press conference, company CEO Dean Eisner unveiled an auction handbook.
The 120-page guide, Auction Handbook, contains information to help dealers, factories, financial institutions and others that buy and sell vehicles at wholesale auctions.
Eisner said Manheim decided to produce the guide after he attended an NADA training session and realized that even experienced dealers have questions about auctions.
Eisner said the company wanted to create a reference book that could be used at any auction.
The easy-to-read guide contains a glossary of terms, frequently asked questions and advice for buying and selling vehicles at an auction.
The free guide is available at Manheim auction sites and online at www.manheimauctions.com.