Many people (including myself) have publicly predicted the current used car shortage. For years, it has become quite obvious that the used car supply is shrinking. This shortage of used cars would be enough to damage a normally functioning used car marketplace. Unfortunately, this severe disturbance in the normal supply and demand ratio comes during a period of severe volatility in the used car industry.

The retail used car industry is just beginning to repair itself from the credit seizure of 2008. Our industry has also recently gone through the liquidation of thousands of dealerships and jobs. Combine this with the bankruptcies of GM and Chrysler, a massive Toyota recall, and official unemployment at 10%, and it is easy to see why the last 3 years have been unprecedented in our industry. Unfortunately, the shortage of used cars is making a difficult situation even worse.

This shortage affects used car manager, auctions, and every member of the used car industry, but it will have a severe effect on the wholesalers. This lack of supply will further depress the margins of most wholesalers. This is unfortunate considering wholesalers already operate with razor thin margins.

Here are some links to other discussions about this used car shortage.

Used car managers experience a shortage of used cars

How the automotive wholesaler is dealing with the used car shortage