Used-Vehicle Market Begins to Unfreeze, Pent-up Supply Looms | Wolf Street
The images are cropping up all over the Internet: Parking lots of temporarily shut-down stadiums and shopping malls densely packed with cars, SUVs, vans, and pickups. These are rental vehicles that rental car companies don’t know what to do with because they cannot rent them out because their travel market has collapsed. And some of them are off-lease vehicles that had been leased and whose lease expired. This is just part of the pent-up supply. The longer these vehicles sit, the more value they lose.
They need to be sold at wholesale auctions, but auction volume had collapsed in the second half of March and April because auctions were closed and then switched to digital channels, and dealers had shown little interest in stocking up as their own used-vehicle sales had collapsed. And the whole used-vehicle market sort of froze up. This glut of rental and off-lease vehicles is now waiting for the used-vehicle market to unfreeze. And this is beginning to happen.