NAPERVILLE, Illinois – At the height of the coronavirus pandemic in mid-April, used-car dealer Alex Tovstanovsky had vehicles jammed six rows deep on his lot in the western Chicago suburb of Naperville.
But the seeming oversupply was not a mistake.
Despite plummeting sales at his store, Prestige Motor Works, Tovstanovsky was betting on a recovery, buying dozens of cars in early April as auction prices for used vehicles dropped.
That bet is now paying off. Tovstanovsky can offer cars cheaper than local competitors and his sales jumped 38% in May versus May 2019.
“This is an election year and I felt the Trump administration and the Republicans in Congress would do whatever it took to keep the economy strong,” Tovstanovsky said.
Rising demand has now pushed used-vehicle prices about 20% higher than when Tovstanovsky made his bet.
“I just wish I’d bought more cars when prices were low,” Tovstanovsky said.
As America shut down in March to combat the spread of COVID-19 and its economy tanked, U.S. new-vehicle sales plummeted. Sales were down around 30% in May, an improvement from a 47% drop in April.
But used-vehicle sales have rebounded faster.
Dealers are now competing to buy vehicles, even as the U.S. economic outlook remains uncertain.
“We actually have an issue now, which is that we don’t have enough inventory,” said George Arison, co-CEO of online used-car seller Shift. Shift’s sales rebounded to pre-COVID-19 levels by late April.
Americans typically become more frugal and favor used cars in uncertain times. Cars remain a vital commodity in a country where getting to work without a vehicle is impossible in all but a few large cities.
In photo: Alex Tovstanovsky, owner of used-car dealer Prestige Motor Works, checks on depleted inventory with his general manager Ryan Caton after sales jumped in May following two down months because of the coronavirus disease (COVID-19) pandemic in Naperville, Illinois, U.S. May 28, 2020. Picture taken May 28, 2020. REUTERS/Nick Carey