Ah, the used car market – the wild, unpredictable beast that has kept us all on our toes in recent years. As someone who’s been knee-deep in the automotive industry for over two decades, I’ve seen it all – from the dizzying highs of unprecedented demand to the gut-wrenching lows of supply chain disruptions. But through it all, I’ve gained a unique perspective that I’m excited to share with you today.

The Year of Volatility

Let’s start by taking a trip down memory lane, shall we? 2023 was what I liked to call the “Year of Volatility” – a rollercoaster ride that had even the most seasoned industry veterans scratching their heads. We started the year with used retail dealers having rather low inventories, and sales came roaring out of the gate. But, as is so often the case, dealers weren’t quite prepared for that initial surge. They flocked to the auctions, driving up prices higher than we’d anticipated.

As I predicted, the pendulum then swung the other way, with prices dropping more than we’d expected through the summer and into the latter half of the year. It was like a game of used car pricing tug-of-war, and we were all just along for the ride.

But that wasn’t the only curveball 2023 threw our way. New vehicle supply also continued to grow, finally reaching levels not seen since the early days of the pandemic. And with that growth came the return of something we hadn’t seen in a while – incentives. Though they didn’t quite reach pre-pandemic levels, they did make a bit of a comeback, adding an extra layer of volatility to the mix.

The Eternal Quest for “Normal”

One of the things I find myself pondering a lot these days is this idea of the “new normal.” What exactly does that mean in an industry as dynamic as ours? When we talk about used car prices and what’s “normal,” are we really referring to the halcyon days of 2019 and before? Or do we need to adjust our expectations and accept that the landscape has fundamentally shifted?

After all, the pandemic didn’t just disrupt our industry – it shook the entire global economy to its core. And as we all know, when the ground shifts beneath our feet, it can be challenging to regain our footing. So, perhaps the key is to embrace the uncertainty and focus on adapting to the “new normal,” whatever that may be.

The Waterfall Effect of EVs

One area where I’ve seen this shift in “normal” play out in a particularly fascinating way is in the realm of electric vehicles. The rise of EVs has had a profound impact on the used car market, and it’s all thanks to what we call the “waterfall effect.”

Essentially, what this means is that the prices of new EVs directly affect the values of their used counterparts. When a manufacturer like Tesla adjusts the pricing of their new models, it has a cascading effect on the prices of 1-year-old, 2-year-old, and even 3-year-old used EVs. It’s like a game of dominoes, where one change at the top knocks down the rest.

And let me tell you, keeping up with this dynamic has been no easy feat. But that’s where the power of data comes in – something I’ve come to rely on heavily in my role.

The Data Dilemma

In today’s automotive world, data is the new gold. Executives, industry leaders, and even individual dealers are constantly clamoring for insights, data points, and analysis to help them navigate the ever-changing landscape. And as someone who’s been steeped in this world for years, I can attest to the importance of knowing how to wield this data effectively.

But here’s the thing – data on its own is just a bunch of numbers. It’s the story behind the data, the context and the business decisions that have shaped it, that really make it valuable. That’s where my expertise comes in. I’ve been fortunate to work for companies like Nissan and Cox Automotive, where I’ve had access to troves of data and the opportunity to apply my knowledge and experience to make sense of it all.

Forecasting in a Volatile World

Of course, with all this data at my fingertips, one of the key things I’m often tasked with is forecasting. And let me tell you, that’s no easy feat in an industry as dynamic as ours. Just ask me about my experience trying to predict lease returns during the height of the COVID-19 pandemic. Talk about a complete miss!

These days, I approach forecasting with a healthy dose of humility. I know that I can be wrong, sometimes by a mile. That’s why I often work with scenarios and probabilities rather than making definitive predictions. It’s all about being prepared for the unexpected and having the agility to adapt when the pendulum inevitably swings in an unexpected direction.

Riding the Repossession Rollercoaster

Speaking of unexpected directions, one area that’s been particularly fascinating to watch is the ebb and flow of auto loan defaults and repossessions. It’s a topic that I get a lot of questions about, and for good reason – it’s a critical indicator of the health of the used car market.

Underline: The key to understanding this dynamic lies in the concept of equity. When vehicle values were soaring in 2021, consumers were sitting pretty, with plenty of positive equity in their loans. But as those values started to decline in 2022 and 2023, that equity quickly turned negative, putting a lot of borrowers at risk of default and repossession.

Underline: However, it’s not all doom and gloom. Despite the economic slowdown, we’re still seeing positive job growth and a relatively low unemployment rate. And as long as people have steady incomes, they’re going to do whatever they can to hang onto their cars and keep getting to work. So, while we may see a uptick in repossessions, I don’t expect to see the kind of dire scenario that some have been predicting.

The EV Enigma

Of course, no discussion of the used car market would be complete without a deep dive into the ever-evolving world of electric vehicles. It’s a topic that I find endlessly fascinating, and one that’s been a constant source of questions from my colleagues and clients.

Underline: The way I see it, the impact of EVs on the traditional used car market is a bit of a double-edged sword. On the one hand, the technology and battery health of these vehicles can be a big selling point, potentially increasing their value. But on the other hand, as the technology continues to evolve, there’s a risk of older models quickly becoming obsolete, dragging down their resale value.

It’s a delicate balance, and one that I’ve been advising my clients to navigate carefully. The key, in my opinion, is to stay on top of the data and the tools that can help measure and communicate the health of an EV’s battery and other critical components. Underline: That kind of transparency and information can go a long way in building consumer confidence and facilitating smooth transactions.

A Call for Nimbleness

As we look ahead to 2024 and beyond, the one thing I can say with certainty is that the used car market is going to continue to be a dynamic and ever-changing landscape. Underline: That’s why my advice to dealers is to stay nimble, to be constantly scanning the horizon for the next big shift, and to be willing to adapt on a dime.

Whether it’s the rise of online car buying, the ebb and flow of new vehicle supply, or the continued evolution of the EV market, the dealers who are able to stay agile and responsive are the ones who are going to come out on top.

And of course, I’ll be there every step of the way, sharing my insights, my data, and my experience to help guide the industry through whatever curveballs come our way. After all, Nissan has always been at the forefront of innovation, and I’m proud to be a part of that legacy.

So buckle up, my friends – the used car market is about to get even more exciting. And I can’t wait to see what the future holds.