David Paris of J.D. Power Explains How Manufacturing Focus on SUVs, CUVs and Trucks Creates Strong Demand for Passenger Cars in Used Vehicle Market
"We're going to see the volume of CUVs and SUVs at used car auctions surpass that of passenger cars. The prices of used passenger cars are going to be driven up: it's simple supply and demand." -- David Paris, J.D. Power
There's a significant disconnect in the mix of vehicle types available in the market between the new and used automobiles in the U.S., and it's good news for current owners of passenger cars, says David Paris, Senior Automotive Analyst at JD Power in a recent podcast interview for journalists.
J.D. Power's analysis of the market shows that as automobile manufacturers shift their focus to producing sport utility vehicles (SUVs), crossover utility vehicles (CUVs) and light trucks, it is elevating the value of used passenger vehicles.
Some manufacturers have reported plans to stop or significantly reduce production of passenger cars entirely in coming years.
"While passenger cars are not going away entirely...the overall pool is definitely shrinking," says Paris. "OEMs are making fewer passenger cars. As a result, there are going to be fewer passenger cars returning to the used vehicle marketplace. So, we're seeing a situation where the actual wholesale volume at auction of CUVs and SUVs is about to surpass that of passenger cars. If this trend keeps going on -- which it is -- we're going to see fewer and fewer passenger cars," he says.
The implications for the used-vehicle market are clear.
"The market for used-passenger cars of all sizes are outperforming CUVs and SUVs from a value standpoint. Prices are up this year for most used passenger cars that J.D. Power tracks," explains Paris.
This, he says, will be good news for passenger car owners, and a trend that a dealers and finance providers need to anticipate and accommodate.
Luxury Attributes Being Extended its Reach to More Markets
Another factor disrupting the auto market, according to Paris, is a blurring of the differences between mainstream and luxury vehicles.
"There used to be this clear distinction between what makes a regular mainstream car and what makes a luxury car that people were willing to pay a premium for. Now, however, we're seeing mainstream vehicles coming out that are pushing the envelope in terms of premium features. If you covered up the emblem you wouldn't be able to differentiate conventional vehicles from luxury vehicles," says Paris.
It is yet another factor that is contributing to the strengthening performance of used-passenger vehicles tracked by J.D. Power.
To listen to the entire interview with David Paris, visit: