This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/the-new-automotive-math-trouble-for-used-car-sellers-hope-for-dealer-showrooms-a33bf7c9

New Car Prices Are Shocking. Used Ones Are Worse. What It Means for Dealer Stocks.

By
Jack Hough
  • Order Reprints
  • Print Article

U.S. new-vehicle inventory hit 1.83 million units last month, up 73% from a year ago. But prepandemic inventory was over some 3.5 million units. Here, a salesman at a car dealership in New York City.

Spencer Platt/Getty Images

My car seems to be beating the stock market. It’s nothing special—a midsize, mass-market sport-utility vehicle leased in September 2020. On the pandemic supply-chain timeline, that’s after the toilet paper panic and just before the everything-else shortage. And yes: leased. I get a new car every three years to avoid hassle and periodically clear my seat rails of Happy Meal fries.

The lease is based on a $40,000 purchase price and a $26,000 “residual” value at turn-in, which I can pay for the car if I want. I’m running so far over my mileage allotment that I’m starting to suspect myself of sleep- Uber -driving. That should subtract from the car’s actual value at turn-in, yet I see identical, high-mileage cars selling now for $33,500. If those prices hold for a few more months, I’ll be “up” on my buy option by 29%. That’s two points more than the S&P 500 index has returned over the same stretch.

Copyright ©2023 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.