![]() PAG: Penske is anticipated to benefit from acquisitions, and the opening of dealerships in the United States and European markets. This is expected to boost the firm’s profitability, going forward. This Zacks Rank #1 (Strong Buy) firm expects sales and earnings to witness year-over-year growth of 8% and 16.1%, respectively, in fiscal 2020.You can see the complete list of today’s Zacks #1 Rank stocks here. SAH: The stock has more than doubled in the past 12 months and looks poised to continue its bull run in 2020.Markedly, Sonic’s pre-owned vehicle chain, EchoPark is growing. This has brightened the prospects of the below-mentioned auto companies that deal in used cars. While highly-priced new vehicles - owing to mounting R&D costs - could deter debt-weary millennials to make big ticket purchases, the demand for used vehicles is likely to remain robust. ![]() While the first group is mainly engaged in the production of various types of vehicles, the latter deals with both new and used vehicles. The automotive industry primarily consists of two types of companies - a handful of multinational auto giants and numerous retailers. While this does not suggest a huge decline, still the ebbing supply is likely to support the selling price of used vehicles. Power, 15.35-million used vehicles (upto five-years old) had returned to the market in 2019 and the company forecasts 15.28-million vehicles to come back to the market in 2020. The inventory level in 2020 is expected to either remain stable or decline slightly. Notably, the volume of off-lease vehicles returning to market peaked at $4.1 million this year. While the share of trucks and SUVs in the used-vehicle market will continue to grow, higher supply of these vehicles coming back to market may lower their resale value. In 2019, small and midsized cars witnessed stronger price appreciation than spacious vehicles like trucks or SUVs and the trend is likely to continue in 2020. Used car demand from mass-market brands is expected to remain strong. However, competition is expected to remain high. This offers opportunity for new players to enter the market easily. Notably, the biggest used-vehicle retailer, CarMax KMX holds roughly 3% market share in the industry. The used car industry is highly fragmented and the situation is not expected to change anytime in 2020. Omni-channel retailing and high number of off-lease supply are anticipated to offer a wide variety of options to shoppers in the used-vehicle market. Rising prices for new vehicles and weakening credit conditions are likely to result in new vehicle sales decline in 2020 as well. Further, used trucks made handsome profits of $1,200 per unit versus $540 each for new trucks. Per JD Power, dealers had generated average gross profit of $140 on a mass-market new car in 2019, whereas profit on used cars came in at $950. In contrast, average new vehicle department segment sales through the first nine months of 2019 had declined 1% year over year. According to NADA, average used-vehicle department sales in the first nine months of 2019 totaled $15.2 million, suggesting a3.7% year-over-year uptick. Per National Automobile Dealer Association (“NADA”), the average transaction price for the same through the first six months of 2019 was $20,835, higher than the year-ago level of $20,390. While full-year 2019 figures for used vehicle sales and average price have not been released yet, average selling price of used cars is also on the rise. used and new vehicle sales in 2018 had amounted to 40.4 and 17.2 million units, respectively. Per Statista data, the used-vehicle market was more than twice the size of the new vehicle market every year from 2000 to 2018 in the United States. The presence of several online car sales sites has enabled buyers to pick a used car through online sites.ĭata Validating the Used-Vehicle Market Boom Increased use of dedicated online sites to sell used cars is having a positive impact on the used-car market. Notably, digital revolution is disrupting used-car retailing. ![]() This resulted in higher demand for used vehicles and supported its prices through 2019. In addition to these, the lucratively priced, high-quality used vehicles inventory has prompted consumers to think about the alternatives of buying new cars. Rising prices of new cars and low discounts to buyers have tamed consumer demand and consequently resulted in decline in new vehicle sales. Technological development with regard to electric, autonomous and connected cars demands huge investment, which is then passed on to consumers. With a shift toward electric and self-driving vehicles, automakers are re-orienting their business models. Amid economic slowdown concerns and weak credit growth, consumers are getting more inclined toward used vehicles. New emission standards, and rise in ride-sharing services and used car sales are weighing on the demand for new vehicle sales.
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