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As we enter into Q2 2022, the already strong used vehicle market is expected to heat up. Experts at Cox Automotive predict the coming months will be the strongest part of the year for vehicle sales:
“We anticipate the second quarter – and particularly April – will be the strongest part of the year for used vehicle sales and values,” Cox Automotive chief economist Jonathan Smoke reported in a recent article.
Smoke told readers, “Once we get through the spring, we expect demand to wane somewhat and should see closer to normal price depreciation patterns for the rest of the year. That said, we think our call for not expecting a price crash in 2022 – just depreciation – is still very likely given continued challenges with supply conditions.”
In this blog post, we’ll examine Q1 2022 data from Cox Automotive that points to the used vehicle market heating up. We’ll also give you tips for meeting your consumer’s needs in the current economy.
Delayed Tax Refunds Expected to Increase Used Vehicle Sales this Spring
Chris Frey, a senior manager of economic insights for Cox, reported that the used-vehicle market was gaining steam in the final weeks of Q1 2022, pointing to the start of the anticipated spring bounce in auto sales.
According to Frey, “We expect to see strengthening wholesale values in April and May, with an uptick in demand for used vehicles, driven in part by tax refunds putting more cash into the economy…The market will likely see a stronger April performance as most refunds expected will have been distributed as the month begins, and the average refund amount is at a new record and up 12% year over year."
Given the increase in tax refund amounts, it will be interesting to see how April shakes out. Will consumers use their refund to buy a car or will they choose to save it? We'll find out soon.
Continued Supply Chain Issues Reduce New Car Inventory
According to a recent report in Automotive News, “China's efforts to curb its largest COVID-19 outbreak in two years has forced companies like automakers Toyota Motor Corp. and Volkswagen Group to suspend some operations, raising concerns over supply chain disruptions.”
With the U.S. auto industry still struggling to keep up with challenges and bottlenecks emanating from supply chain issues, this is foreboding news.
With new car prices increasing at historic levels, many buyers will likely choose to purchase a used car or make the decision to keep their current vehicle for some time to come.
Meeting Your Consumer’s Needs in Today’s Environment
Consumer needs are constantly changing. It’s important for financial institutions to offer products and services that meet those evolving needs and address the challenges beyond control—like a global pandemic, the price of gasoline, or supply chain shortage!
It’s important to partner with organizations that evaluate consumer behavior and trends and address marketplace and economic challenges in their product development roadmap.
Seek service providers that consistently invest in their current product technology to ensure it remains relevant and intuitive. Likewise, you want your partners to be on the cutting-edge of product development, creating and launching new products that bring value to your organization and membership/customer base.
Whether consumers are purchasing a used vehicle or simply keeping their cars longer, SWBC’s newly launched healthCAR program will give any account holder—regardless of the mileage on their vehicle, or where their loan is serviced—the ability to purchase an affordable, monthly (plans start at $53/month) vehicle protection option that can help them budget for and prepare for the inevitable expenses that come with vehicle ownership.
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