We already know car sales have taken a huge hit due to economic and practical impacts of the coronavirus. I’ve explored some data on the sales drops in various areas of the country, and used cars have been affected more than new models. A recent study from iSeeCars shows which used models have lost the most sales.
How iSeeCars put together the data:
iSeeCars analyzed over 1.8 million used cars for sale in February and March 2020 to determine which models have the most significant slowdown in sales, i.e. models with the largest drop in the percentage of cars sold within a month of being listed. These vehicles present prime negotiation opportunities for consumers who are in the market for a used car.
In February, the Tesla Model 3 was one of the hottest selling pre-owned cars on the market with 71.5 percent of available inventory sold within 30 days. Covid-19 started to have a major impact on the markets around mid-March. During this time, only 47.4 percent of Model 3s listed for sale found customers within that 30 day period. One possible reason for the pre-owned Model 3 sales decline is that the target buyer for that car may be more likely to be working from home and therefore not in need of transportation.
Of course, one of the key reasons for the dramatic drop in used car sales is the closure of dealers in some of the pandemic hot spots in the country. While some stores have been able to operate with remote deals and delivery, this presents a challenge for used car retailers since a lot of buyers prefer to check out pre-owned models in person prior to purchasing. Online-only retailers like Carvana and Vroom have has sales success during covid-19 due to the fact that they deliver and offer return policies, both of which are rare offers from your average used car lot.
One issue that I disagree with is the iSeeCars’s assertion that the big drop in sales with specific models will result in more negotiation leverage for the buyer.
Even during a downmarket, the margin for negotiation on used cars isn’t nearly as wide as it is on new units. Most dealers are already going to take into account the market conditions when advertising the price of their car and will be adjusting said price as the car continues to sit on the lot. For example, a dealer selling a Model 3 in February is very likely to drop their online price in March.
What I’ve been encountering as I look at car listings is advertised price-drops of several thousands of dollars on some used cars, but also dealers not willing to go much further because they might already be selling these units for less than what they paid for them.
For more data about used car sales in various price points in light of covid-19, check out the full study at iSeeCars.com.
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