J.D. Power's decidedly brighter outlook calls for "normal depreciation" for the remainder of the year, said Jonathan Banks, general manager of vehicle valuations. J.D. Power expects wholesale used values will be down 2 to 4 percent at the end of the year, vs. an initial, pre-COVID-19 projection that called for values to be flat to slightly up.
The research company expects used-vehicle values to remain relatively strong because of low inventory of new vehicles, as well as pent-up demand. Demand has been exceptionally strong over the past three-plus weeks, said Larry Dixon, senior director of valuation services at J.D. Power.
Used retail sales in parts of the country that have been less affected by the coronavirus have been above pre-virus expectations, Dixon said. And markets that have been more impacted are just now coming back to pre-virus levels of activity, he said.
"We have pent-up demand in major markets still," Dixon said. And even with excess supply coming back, those cars and trucks should arrive at a time when dealers are sorely in need of inventory, he said.
In the meantime, dealers may need to be a little more aggressive with trade-in offers or cast wider nets to acquire used cars and trucks. "There's going to be arguably some short-term compression in terms of margins," Dixon said, adding that retail prices aren't likely to rise much.
Uddin, of Prime Automotive, said he plans to hire two full-time used-vehicle buyers whose sole task will be to monitor various online auctions for used vehicles.
More immediately, he's focused on smart appraisals and dealing with lean inventory. "We're kind of focused on running with a tight days' supply and focused more on turn rather than going out and paying too much," he said. "Because we know the bubble is going to burst, eventually."