Tight Used Car Market Dynamics

The used car market is facing significant sourcing challenges, as the lingering effects of pandemic-era production shortages continue to diminish the availability of low-mileage options. Many dealers, such as Bill Vaughn, report that consumers are holding onto their vehicles longer due to affordability concerns and negative equity issues, exacerbating the scarcity of good trade-ins. As a result, smaller dealerships must navigate a competitive landscape where larger retailers are aggressively bidding for limited stock, leading to increased acquisition costs. This tightening of supply has resulted in solid sales volumes for used cars but with diminishing gross margins, revealing the pressures dealers are under in the current market.