Auto Service World
News   December 22, 2022   by Adam Malik

How much until longer vehicle supply rebounds

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The supply of used vehicles is going to continue to struggle for at least six more years, according to an expert.

New vehicle sales have been at levels not seen in years. Used vehicle inventories are so low that values of what’s out there have hit levels never seen before.

And without enough new vehicles to keep the used market moving — DesRosiers Automotive Consultants recently noted that without a big December, 2022 sales will be the lowest since 2009 — the aftermarket could stand to benefit as consumers will opt to maintain and repair their current vehicle rather than replace it.

Automakers are struggling to replenish inventory as shortages of semiconductors plague production. They’re putting whatever semiconductors they have into higher-end vehicles. There’s little relief in sight.

“Right now, supply is going to get worse before it gets any better,” said Daniel Ross, senior automotive analyst at Canadian Black Book.

“New volume and production for the last two, two and a half years have been suppressed,” he added during the TalkAuto event, hosted by Canadian Black Book in November in Woodbridge, Ontario. “And it’s been very low. And we’re all suffering from low inventory, ultimately, across the board.”

This means that the supply of used vehicles will be constrained even longer. Without a sudden replenishment of new vehicles, consumers will have fewer less expensive used options.

“So what we’re going to see is, used vehicle supply is going to stay suppressed, it’s going to stay low,” he observed. “Without that gateway from new cars, inventory is not really going to start replenishing until about the 2028 timeframe.”

There could be some sort of relief sooner as consumers may opt for longer lease terms to counter high interest rates and ease their monthly payments but that would have a minimal effect on things, Ross said.

Even so, as interest rates go up — and economic pressures continue — that could keep people away from any sort of vehicle purchase. So expect used vehicles to remain expensive and vehicle owners to opt to repair rather than replace.

“With that low used car supply, that’s going to keep retained values elevated,” Ross reported.

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