“All of us have seen stronger new-vehicle sales than used over the last month, which is totally opposite as to the way the year started,” Maroone USA CEO Mike Maroone told Automotive News‘ “Daily Drive” podcast. “And at this point, I don’t think any of us really know … what the right values are on used vehicles.”
Maroone said he sees a “tremendous amount of risk” in today’s used-vehicle market and suspects dealers will absorb “significant losses.”
“So as much as we want to sell a lot of new vehicles and take trades and buy used vehicles, how we balance that used-vehicle valuation is going to be really tough,” he added.
Cox Automotive, which owns auction giant Manheim, acknowledges that the abrupt drop in activity has thrown a wrench into its Manheim Market Report, a guide to used-vehicle values.
The company has sought to rectify the uncertainty with a new daily retention guide that advises dealers how the market is changing in these volatile times.
“We are advising clients to adjust MMR by the retention rate to get an estimate of what it takes to sell in today’s wholesale marketplace,” Cox Automotive Chief Economist Jonathan Smoke said in a market update this month.
Still, some dealers have noted that, with so few vehicles being wholesaled, values could be skewed even using the retention-guide formula.
