The Dog Days of Summer

In light of my past record in predicting trends in the used car market, I will refrain from stating any firm predictions. However, I can’t resist calling attention to the fact that we are now officially in the “dog days of summer”. To this extent, it is worthy to stop and question what’s likely to happen to the used car market for the balance of 2009.

As I have repeatedly stated, there is no shortage of used cars but, rather, an abundance of buyers at both the wholesale and retail level. If new vehicle retail sales remain flat, there may be a true shortage in the future, but not now. As we have all seen, the recent strength of the market has caused used car wholesale prices to soar.

There are not a lot of things we know for certain, but one trend has been that the 3rd and 4th quarters are generally the slower half of the year for retail sales. Therefore, it might be reasonable to expect the pace of retail used sales to level off, leading to lower wholesale prices. However, because of the perception of a shortage, I don’t anticipate wholesale prices to decline as much as they might ordinarily, although I do expect the upward pressure on prices to abate.

Let me know your thoughts and predictions.