Courtesy Automotive Group's Gruwell said he watched as wholesale values "dropped like a rock" in March and April. Courtesy had anticipated that struggling rental-car companies would unload inventory.
So far, that hasn't happened. Both the wholesale and retail used-vehicle markets have been relatively strong since the beginning of May.
"There's really two large factories for used cars, other than trade-ins and street buys," Gruwell said, pointing to cars coming out of rental fleets and lease returns. "The rental-car companies held tight," he said, adding that many lease returns have been delayed, too.
Asbury Automotive Group Inc. CEO David Hult also recalled that rapid drop early in the pandemic, calling it unprecedented in his 34 years in the automotive business. Asbury opted not to shed used inventory at those fire-sale prices, as some other retailers did, Hult told investors in a business update Tuesday, July 7.
"We sat on it because I just knew the valuations weren't real," he said.
Likewise, Asbury won't chase volume on used vehicles as prices rise. The key is to avoid overpaying to acquire used vehicles and to protect profit margins, Hult said.
Asbury reported last week that its used-vehicle volume rose 1.5 percent in June compared with a year ago as gross profit per used vehicle soared 27 percent.
"Overpaying for inventory and creating lower margins isn't going to benefit anyone," Hult said. "So we're thoughtfully looking at this every day and going store by store, being strategic as to how we can acquire inventory."
Even so, an uncertain road lies ahead. "By no means is the crystal ball clear, especially for the next three to six months," said Cox Automotive's Smoke.
Much will depend on the pandemic's trajectory. Cases of the virus are surging in parts of the U.S. less affected during the outbreak's early weeks.
Cox's latest forecast calls for wholesale used-vehicle values to peak this month, followed by a slight decline later this summer and into fall, Smoke said. After stabilizing near year-end, values are likely to rise to new highs next spring, he said.
Gruwell said he's adapting to the fluctuations. "It's a pretty fluid market," he said. "You just got to pay attention to what's going on."
Jackie Charniga contributed to this report.