America’s used car business is facing a mid-life crisis: dealers are selling tons of late-model cars and a lot of dinosaurs, but sales of autos in their middle years are declining.
And that’s bad news for some car salesmen. Independent dealers are showing up at auctions looking for their bread and butter: the six-year-old vehicle at a certain price point.
“The problem is there are none,” said Jonathan Smoke, chief economist at Cox Automotive, which owns Kelley Blue Book, Manheim auctions and other brands.
Overall, the used car business is booming with sales having grown by almost 3.4 million units since 2014, Smoke said. However, almost all of the growth has occurred at the ends of the spectrum, with sales of vehicles under four years old up by 2.6 million units over the four years and sales of vehicles 17 years and older up by 1.7 million units, he said.
Meanwhile, sales of vehicles ages five-to-eight years and nine-to-12 are each down by about 700,000 units. Chalk the weak sales up to the Great Recession, Smoke said. A slowdown in production of new cars during the recession and the years afterward left a hole in the supply of mid-life cars. Franchise new car dealers are generally faring OK, Smoke said, because they have access to newer used cars.
There are more than 25 million more vehicles four years of age and under than vehicles that are five to eight, according to Smoke. That’s made growth difficult for independent dealers who traditionally specialize in mid-life cars, he said.