For the past five years, small used car sales have been consistently low, especially for BHPH dealerships. Compact and subcompact used cars have sat on lots for months as customers opted for larger vehicles. Now, it seems that that may finally be changing. After months of heavy competition and high default rates, this could be cheering news for BHPH dealers.
Since 2013, small used car sales and prices have dropped every year. Earlier this year, however, analysts noticed a change, and now it has become notable enough to be more than a simple fluke. Because of increasing gas prices and stagnant middle-class wages, more BHPH buyers are becoming interested once again in smaller vehicles. The low prices prompted by years of meager sales have made compact and subcompact vehicles even more appealing. Add to that the rising prices of used SUVs thanks to high demand, and it’s easy to see why more and more BHPH dealerships are seeing a rise in small used car sales.
This, of course, is having an affect on the BHPH industry as a whole. Because compact and subcompact used vehicles have been unpopular for so long, auto auctions and dealerships have not been focusing on them. Add to that low wholesale prices on such vehicles and dealerships’ eagerness to take advantage of this new change in small used car sales, and it’s hardly surprising that quality compacts and subcompacts are sometimes hard to find. According to one dealer in Ohio, Glenn Mears, finding small used cars has become a problem while mid-sized used sedans remain readily available.
So will this trend continue, and what will it mean for BHPH dealerships long term? According to a senior analyst at Edmunds, Ivan Drury, of all the contributing factors, gas prices are pushing the changes in small used car sales the most. That, in turn, means that as long as gas prices continue taking a larger-than-normal bite out of stagnant middle-class incomes, small used car sales are likely to continue rising. However, Drury notes that will only be the case as long as compact and subcompact vehicles remain affordable and unless gas prices hit a national average of $4 per gallon.
So, while BHPH dealerships are enjoying an increase of small used car sales, and while this appears to bode well for sales in the months to come, it is important not to allow prices to be pushed too high. As such, many BHPH dealers are looking for the best options at the lowest costs and hoping the wholesale stock improves. Either way, for the next few months at least, it may be prudent to keep a large selection of compact and subcompact vehicles on the lot.
Source: USA Today