Gross sales of licensed used autos within the U.S. fell in 2022 to their lowest degree in eight years as sellers grappled with a stunted provide of certifiable used autos returning to market and a few prospects switched again to buying new autos as manufacturing improved.

Final yr, gross sales of licensed pre-owned autos dropped to 2.49 million, down 9.4 % from 2.75 million in 2021, in keeping with the Automotive Information Analysis & Information Middle. It was the bottom annual quantity since 2014, when 2.34 million licensed gross sales have been recorded.

Licensed pre-owned automobile gross sales rose to that sturdy degree in 2021 as extra prospects exited their leases, realized they could not get a brand new automobile due to tight provide and as a substitute selected to purchase out their previous lease and get it licensed, stated Brian Danahy, director of variable operations in Florida for Ed Morse Automotive Group of Delray Seashore, Fla.

“As to why [sales] dropped in 2022, I feel you probably did have some [new-vehicle] stock conditions get higher for some producers,” stated Danahy, whose group has greater than 30 shops in Florida, Texas, Oklahoma, Iowa, Illinois and Missouri that delivered 15,566 used autos final yr — 4,404 of which have been licensed.

Most automakers noticed their licensed used-vehicle gross sales fall yr over yr, in keeping with information compiled by the Automotive Information Analysis & Information Middle.

Toyota Motor North America’s licensed pre-owned automobile gross sales fell 9.2 % to 445,253 in 2022. The automaker remained the market chief in licensed gross sales final yr, capturing about 18 % of the annual licensed quantity.

Normal Motors’ licensed used-vehicle gross sales declined 18 % to 289,571 autos. Ford Motor Co.’s licensed used-vehicle gross sales ticked up 3.4 % to 228,799, fueled partially by stronger supplier participation in its Blue Benefit certification program. American Honda’s licensed used-vehicle gross sales fell 2.2 % to 303,766. And licensed used-vehicle gross sales for Stellantis fell 18 % to 240,485.

Licensed pre-owned gross sales have been robust in 2021 as a result of they have been partly fueled by a “superb” provide of off-lease autos, stated Dan Rodriguez, supervisor of auto remarketing at American Honda. For the automaker, the vast majority of licensed gross sales happen in 3- to 4-year-old autos which can be coming off lease, he stated.

Dealerships additionally grappled with tight new-vehicle provide in 2021, which manifested after the onset of the coronavirus pandemic in 2020 kicked off provide chain issues and snarled automobile meeting traces. When dealerships could not get new product, they optimized and gravitated to promoting licensed used-vehicle stock, Rodriguez stated.

However 2022 was a unique story. After fewer autos have been manufactured and offered due to COVID-19-related issues, fewer autos existed that yr to age into used stock and be traded in.

“There is a symbiotic relationship between new and used, in order manufacturing turned challenged which means there’s much less new automobiles being offered,” Rodriguez stated. “Meaning much less trade-ins, and the purchasers who have been coming off lease who may get into a brand new lease now could not as a result of they needed to wait an prolonged time period to get a brand new automobile.”

In 2022, American Honda noticed a “large spike” in prospects who would merely buy their off-lease automobile on the finish of the time period as a substitute of stepping into one other one, Rodriguez stated.

For some automakers, licensed used-vehicle gross sales rose in 2022. Firm executives who spoke with Automotive Information partly attributed the positive factors to rising the pool of used-vehicle stock eligible for certification.

Some automakers supply extra customer-facing and dealer-facing incentives that assist enhance general gross sales, stated Ben Bartosch, a supervisor of CPO options at J.D. Energy. However some automakers even have circumvented a used-supply stock drawback by increasing certification parameters, he added.

Hyundai Motor America’s licensed gross sales rose 24 % to 95,962 in 2022. Fred DePerez, Hyundai’s senior vice chairman of world product line administration, advised Automotive Information that achieve was partly fueled by the truth that Hyundai in February 2022 allowed for extra autos to be licensed.

What Hyundai constitutes as certifiable stock modified to incorporate 6-year-old autos or autos with as much as 80,000 miles — one yr or 20,000 miles greater than what was beforehand allowed, DePerez stated.

“To me, that was the largest factor as a result of unexpectedly your stock pool will increase considerably from what the sellers needed to take care of the stock problem,” DePerez stated.

Hyundai additionally dropped the “Hyundai licensed pre-owned” designation from its program in favor of “Hyundai licensed used” after the corporate noticed analysis that indicated prospects perceive that terminology greater than CPO, DePerez stated.

These modifications have been set in movement, DePerez stated, as a result of the automaker noticed an opportunity to leverage the used-vehicle market as financial uncertainty started to seep in due to COVID-19.

“It sort of creates this want for worth,” DePerez stated.

Automakers which have expanded certification parameters place their very own limitations on age and mileage and what kind of guarantee a automobile might get.

Ford launched a second-tier certification program, Blue Benefit, in 2021. Stock is backed by warranties below two certification ranges: gold and blue. Normal Motors launched CarBravo, its personal resolution for scaling used stock, in January 2022.

“One of many current enhancements we simply did was we elevated for Blue Licensed; it now consists of models within the 120,000 to 150,000 class on miles,” stated Christopher Thornton, supervisor of U.S. gross sales technique at Ford Motor Co. “We’re increasing that chance when it comes to what our sellers are in a position to promote, rising to a bigger proportion of their used stock.”

About 1,500 sellers now take part within the Blue Benefit program, Thornton advised Automotive Information. That is up from roughly 1,400 in November.

It is truthful to say some sellers might have chosen to skip certifying used autos in 2022 as a consequence of further prices, akin to inspection and insurance coverage, Thornton stated.

Sellers “might imagine ‘OK, what profit am I getting out of that by including that certification charge? I need not undergo that. I can nonetheless promote the unit,’ ” Thornton stated. “However then that is the place we are available and speak to these benefits.”

Hyundai’s DePerez additionally famous used automobiles turned extra scarce in 2022 as leasing charges fell and extra prospects stored their autos for affordability’s sake.

Used-vehicle provide continues to be tight and leasing for the final 24 months has been slower, stated Gregg Ciocca, CEO of Ciocca Dealerships of Allentown, Pa., northwest of Philadelphia. The group has 40 dealerships in Pennsylvania and New Jersey. It sells on common about 280 licensed used autos and about 520 non-certified used autos monthly.

Prospects are shopping for out their leases, which not solely ends in the missed sale of the brand new automobile they may lease or purchase but in addition means the dealership group will not have the aged automobile to certify and promote on its used-vehicle lot, Ciocca advised Automotive Information.

One of many methods his dealership group grew its licensed stock was by way of its loaner fleets, Ciocca stated. These have been “excellent” for certifying as a result of they have been about 1 yr previous or much less or had 40,000 miles or fewer. Ciocca Dealerships would take these out of circulation and typically presell them within the licensed enterprise market, then substitute them with one other loaner, he stated.

The dealership group started preserving them in its fleets longer as a result of it did not have the availability to have the ability to substitute the automobile. Fleets “received a little bit bit older and smaller,” Ciocca stated. The group is attempting to construct that stock again.

“Our inventories are up, however not wherever close to the place we’ve free circulate now or [are able] to show over our loaner automobiles and put them proper into our used-car inventories,” Ciocca stated.

Ed Morse Automotive Group’s Danahy stated provide additionally stays tight at his dealership group.

“We’ve got to be extra environment friendly in our acquisitions of our pre-owned automobiles and getting our stock obtainable to promote, to get its presence on-line as rapidly as doable in order that we will flip [it] as rapidly as doable,” Danahy stated.

Licensed gross sales probably will not swing upward in 2023, stated Ron Cooney, supervisor of Toyota Motor North America’s licensed used-vehicle program. The automaker has about 1,238 U.S. dealerships and in any given month, greater than 1,000 take part within the Toyota licensed program, Cooney stated.

Licensed gross sales which were robust within the first quarter might degree out within the subsequent month or two, Cooney stated.

“I do not consider we will hit 2.8 million or 2.75 million” yearly, Cooney stated. “It is positively not going to be that prime. It is most likely going to be similar to the place it was final yr.”