Dealership sales of used vehicles were flat in December, while supply levels remain constrained among the most affordable models.
Driving the news: According to Cox Automotive, retail sales of used cars hit 1.4 million units last month.
That’s in line with November’s sales, ending a period of month-over-month growth. However, dealers sold 12% more than they did in December 2023.
December’s certified pre-owned (CPO) sales rose 4% from November but were lower by 4.9% compared to 2023 levels, driven by tight supplies of off-lease vehicles and trade-ins.
Used car listing prices were slightly higher on a monthly basis, hitting $25,271, but average listings are still down 3% from the previous year.
While affordability challenges will likely persist into this year, listings for top-selling used car brands (Ford, Chevrolet, Toyota, Honda, and Nissan) are currently 5% cheaper than December’s average. Targeting models from these automakers could provide some relief to customers.
Zooming in: While sales were in stasis after November, inventory is becoming more constrained, especially for cheaper models.
Days’ supply of used vehicles at the start of January was 48, up slightly from December but tight for the time of year, with past January levels typically above 50 days.
Used vehicles under $15,000 had only 37 days’ supply, 11 days below the overall industry average.
Looking ahead: Lower production between 2020 and 2024 continues to squeeze the supply of used vehicles from those model years.
This strain on inventory is likely to ramp up in 2025. Cars.com predicts dealers will see a 7% decline in supply levels for vehicles aged zero to six in the months ahead.
Despite inventory constraints, Cox Automotive still expects to see an increase in used car demand, forecasting a retail sales total of 20.1 million (up 1.2% from 2024).
However, with fewer off-lease vehicles returning to the market, dealers should expect CPO sales to shrink by about 1.6%.
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