Wholesale used-vehicle prices are on the rise, increasing 6.6% in the first 15 days of June compared with May, bumping Manheim’s mid-month used vehicle value index to 146.1. The index is forecast to hit an all-time high if the value holds through the rest of the month, according to Manheim’s mid-month index. Manheim first issued a mid-month index report in April as a response to the COVID-19 economic crisis.
Charlotte, N.C.-based Sonic Automotive is the fifth-largest auto retailer in the United States; its used-vehicle retailer, EchoPark, is reporting a 34% year-over-year surge in June sales in all its stores after plunging in April and May, according to a company press release.
While Sonic’s new-vehicle sales are still lingering in negative year-over-year comparisons, overall sales are still meeting or exceeding early pandemic forecasts, said David Smith, chief executive at Sonic and EchoPark.
“We continue to see improving operating conditions since the onset of the COVID-19 pandemic, including steadily increasing automotive retail consumer demand,” Smith said, noting this took place with a companywide concentration on controlling expenses, so dealerships could generate more profit.
As the used-vehicle market continues on a positive trajectory, vehicle inventories are projected to falter, according to Manheim, with normal used retail vehicles rounding out at a 44 days’ supply. This could further push up used-vehicle prices.
Sonic and EchoPark currently have around a 30 days’ supply of used-vehicle inventory, and new-vehicle lots have a 57 days’ supply, according to Jeff Dyke, president of Sonic and EchoPark. These inventories position Sonic Auto “to meet increasing consumer demand, as well as capitalize on expected near-term inventory acquisition opportunities,” he said.
“We remain committed to controlling our expense structure going forward and achieving greater return on investment through rigorous inventory and vendor service management as well as optimizing marketing expenses,” Dyke said, adding that some areas of the companies’ markets are showing sales volume above pre-COVID levels.
Sonic is expecting the earnings per diluted share from continuing operations for the second quarter to be between $0.23 and $0.33, according to the press release.
Originally published on Auto Finance News