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Used Vehicle Values - The Foundation For The Automotive Industry

The Perfect Storm









By Daniel Ruiz Blinders Off, LLC


Please start with the following video to better understand my analysis:
Auto Market Projections


The following topics all have their part in fueling the storm to come:


1) Trade Cycles and How They Affect New Vehicle Sales Velocity

Used car values determine in large the velocity of new car sales. Most new car transactions involve a trade. The level of equity in the trade oftentimes determines whether a new vehicle transaction will be successful or not. Inclining used car values lead to faster trade cycles while declining used car values lead to slower trade cycles. Dismal new car sales volume during our last recession created a shortage of used cars. This created a large supply and demand imbalance that made used car values soar from 2009 till 2014 as seen on this chart.


This time period was extremely favorable for new car sales because consumers found themselves in an equitable position on their vehicles in a very short period of time. To illu…