Dealers are wary about their used-vehicle prospects in 2023 after worsening market conditions led used-vehicle sales to tumble last year. But while used-vehicle sales are expected to drop again this year, dealers and used-vehicle experts don't expect the hit to consumer demand and profits will be severe in early 2023.
Shoring up that viewpoint: Wholesale used-vehicle prices are down significantly from last year's record highs, but they have not crashed. New-vehicle supply has somewhat improved at the start of 2023, but until fully recovered, the need for used vehicles remains elevated. Even so, major concerns loom, and many dealers say high retail prices and rising interest rates create a one-two punch that will further discourage consumers concerned about affordability and potentially shut more of them out of the market altogether.
The risk to sales volume and profits in 2023 has led dealers to step back and reevaluate the used- vehicle business strategies they put in place in 2021 and early 2022, when consumers had more cash to spend, interest rates were lower and weak new-vehicle supply inflated the importance of and the opportunity for used vehicles.