The new-vehicle sales slowdown of the Great Recession is adversely impacting used-vehicle inventory today, particularly when it comes to customers with budget constraints, according to CarGurus.
Finding inventory at prices below $10,000 is a challenge for dealers because the vehicles that should have aged into that price point were never sold, says George Augustaitis, director of automotive industry analytics at CarGurus.
New-vehicle sales dropped 21 percent in 2009 to 10.43 million units, according to the Automotive News Data Center, and took several years to rebound to normal levels. Because of that plunge, used-vehicle inventory priced below $10,000 has been declining since last year, CarGurus says.
"There is a demand for these vehicles; there's just a lack of supply we haven't seen in years," Augustaitis said.
The fact that consumers are holding onto vehicles longer than ever before also prevents dealers from acquiring lower-priced vehicles. Augustaitis, citing IHS data, noted that the average length of ownership in 2018 was 7.4 years, meaning that 2009-11 model year vehicles are likely idling in customer garages rather than dealership lots.
The drought most impacts the most cash-strapped customers, Augustaitis said. When customers struggle to find used vehicles in their price range, they could be bumped up to the next highest price tier. However, paying even $3,000 more for a vehicle has a demonstrably larger impact on the lowest percentile of shoppers. For example, the difference between a $30,000 vehicle and a $33,000 vehicle is 10 percent, but a shopper accustomed to a $10,000 price point would be paying an additional 30 percent to get to $13,000, Augustaitis said.
"That's enormous at this level," he said.