Around this time in any dealership lot you should expect to find low prices on previous years models as they make room for new inventory. Up until Spring of 2020, vehicle production and sales were on track for us to see that. The pandemic changed and continues to impact the automotive industry. So what does this mean for vehicle sales and vehicle depreciation? We released the 2020 Vehicle Depreciation Report to answer those questions and more. Here we’re going to share some of those insights.
1). Vehicle Demand Remains High
Air travel may be a thing of the past, and it may be years before anyone wants to set foot on a cruise ship again. But people still want their vehicles. Many predicted it would take longer for the automotive industry to recover from COVID-19, especially following a two month pause on production. And, while they won’t beat last year’s sales, they’re coming close. That’s really good, especially when compared against other industries that continue to struggle.
2). New Buyers Sweep the Market
One of the bigger findings in the report is an influx of new vehicle buyers. A considerable number of people are swapping their bus passes for car keys. While not everyone has abandoned public transit, many have hopped on the significantly more private vehicle-ownership bandwagon.
3). Used Vehicle Values Rising
In a blog post earlier this year we covered car rental agencies offloading vehicles and facing bankruptcy. At the time, this seemed like great news for anyone seeking a new-to-them vehicle. However, as mentioned earlier, automakers paused production for two months. With a shortage of new vehicles, used vehicles maintained, and in some cases saw an increase in value.
4). Deliver it to the Driveway, please
Online and app sales of vehicles are another emerging trend this year, making the likes of Carvana and Rodo big winners. Or maybe that makes the people who had their vehicles delivered to their driveways winners. Why not both? Either way, this follows a rising trend in restaurant and grocery deliveries. One could argue these services will lose their novelty when the pandemic ends, but one might be wrong. These services are providing more than safety. They’re also offering convenience, and hours back in people’s days. Those are highly valued perks for everyone, pandemic or no.
How does all of this impact your company and employees?
That really depends on your vehicle program.
If you have a company provided vehicle program, this could be a unique opportunity to offload the fleet of vehicles that have been sitting idle for the past several months. If you reimburse employees for driving their personal vehicles, your reimbursement spend will be lower in 2021. Employees might seize the opportunity to trade up for a newer vehicle while they can get maximum value on their trade-ins. Or they might choose to drive that vehicle a little longer since it’s retaining its value.
Want to dig into the full report? Check out the 2020 Vehicle Depreciation Trends Report.