After a peak of 4.1 million off-lease vehicles came back to the market in 2019, Cox Automotive Chief Economist Jonathan Smoke is forecasting that inventory levels in 2020, in aggregate, should be fairly stable to only slightly lower.
Off-lease supply is at a "high tide for the wholesale market," Smoke told Automotive News in an email.
Lease maturities are expected to be flat, but return rates are likely to rise because of weaker values, Smoke said.
Repossessions also are expected to rise because of record loan volumes and a higher rate of severe delinquencies.
J.D. Power also says the supply peak has passed, but the forecaster does not see a dramatic decline on the other side of the summit. It is expecting only a "slight decline" in overall inventory levels, said David Paris, executive analyst at J.D. Power.
For vehicles up to 5 years old, an estimated 15.35 million vehicles returned to the market in 2019 through the retail, lease and rental channels, according to J.D. Power. In 2020, the company forecasts that 15.28 million vehicles in that age group will come back to the market.
"So not a relatively huge decline, but [it's] still declining supply, which should help support used prices," Paris said.
Within the used-vehicle market, the supply of mass-market-brand vehicles is expected to dwindle slightly beyond 2020.
"But on the premium side of the market, with leasing and all the crazy deals that we've seen over the past couple years, we're actually expecting supply levels to kind of maintain in 2020, with similar levels that we saw here in 2019, and then actually grow by 2022," Paris said.