Motus, the definitive leader in solutions for businesses with mobile-enabled workforces, today released its 2020 Vehicle Depreciation Trends Report, which identifies the trends influencing the automobile industry in light of the COVID-19 pandemic. The report found that the reduced vehicle inventory, coupled with increased consumer demand, has driven up the prices of new vehicles and residual values of pre-owned automobiles. As a result, Motus predicts the rate of depreciation will decrease by as much as 3% over the course of 2021.
The U.S. automotive industry endured its longest disruption in vehicle production since World War II when every major manufacturer ceased operations for an eight-week period in the spring. The shutdown, and subsequent shortage of new vehicles, has the number of new vehicles sold in 2020 on pace to finish between 15-20% below 2019 levels. Despite this deficiency, the report found that consumer demand for vehicles persisted. Used car inventories became constrained due to the reduction in new vehicle production and sales. The high demand and low supply of both new and used vehicles caused prices and residual value to rise across the board. Compared to 2019, the average sale price for new vehicles in 2020 increased by $1,200 to $38,400. Similarly, the average used vehicle price rose by $900 to $20,400 since January.
“The pandemic has decimated vehicle inventories, and consumer demand has remained surprisingly steady. It’s no surprise we’re seeing premium prices on both new and used automobiles,” said Ken Robinson, Market Research Manager at Motus. “New vehicle prices and residual values both influence depreciation and both have been impacted by the pandemic. If supply and demand trends in motion remain consistent, we predict that depreciation will decrease by 1-3% over the course of 2021.”
The report found that an influx of mass transit riders who chose to start driving because of public health concerns was a significant factor in the increase in consumer demand for vehicles. Midway through 2020, U.S. public transit trips were trending at 56% of 2019 levels. At this time, public transportation businesses reported 86% lower ridership due to the pandemic. Beyond an increase in new buyers, a digital transformation in the car buying experience contributed heavily to the rapid recovery of demand for new vehicles. To meet changing consumer preferences, more than 80% of franchised car dealerships had digital buying options in place by the end of June to deliver vehicles right to a consumer’s home.
Additional findings in the 2020 Vehicle Depreciation Trends Report include:
- New vehicle sales doubled from just over 500,000 in April to 1.1 million in June.
- Unless consumer demand slows down, both new and used vehicle prices are likely to remain higher than recent years – climbing to an estimated average price of $39,500 in 2021.
- Consumer preference played a role in surging vehicle sales prices. After a nearly equal split between car and SUV buyers in 2016, buyer preference for SUVs grew by 28% over the past five years and drove average prices up 10%.
To download the full report, please visit: https://resources.motus.com/reports/2020-vehicle-depreciation-trends-report.
Motus is the definitive leader in solutions for businesses with mobile-enabled workforces. Motus simplifies reimbursement and management of mileage, mobile devices and remote work with proprietary software that calculates personalized reimbursements for each employee, while improving employee productivity, reducing overall mobility costs and supporting customers’ tax and labor law compliance programs. The company’s unmatched living cost data, refined over more than 80 years and updated in real time, has made Motus the leading provider of mobile workforce management solutions for top Fortune 500 companies. Motus automotive data, captured and analyzed across the world’s largest retained pool of drivers, also underpins the annual Internal Revenue Service (IRS) business mileage standard, the amount an individual can deduct for business vehicle expenses. For more information please visit www.motus.com or connect with us on Twitter, Facebook, Instagram or LinkedIn.