Now remember when it across an arm and a leg just to buy a used car. Well, new data out there shows the prices have actually been decreasing, including in October from the month prior, and are now down more than three percent on a year.
Over year basis.
Here to talk about some of those trends in the used car market is George Shamone. He's the CEO of a company called ACV. It's a digital platform for dealers to buy and sell use cars.
Thanks for being here, George, now, thank you for having me. Really appreciate it.
I think we all remember those halcyon days, at least for those folks who are selling use cars where you can basically name your price.
And get everything.
We've seen a moderation in that, or may be a renormalization of the market. Give us a sense here at the wholesale level dealers coming in looking to buy. Are the prices much more competitive now than what they were?
I don't know, maybe four years ago, Yes, certainly.
I mean used car values have continued to come down over the last couple of years. Affordability from consumers obviously has been a big challenge, and we've seen prices come down a big part of that is as new supply comes back and the incentives for new peak about now, all of a sudden, there's great lease payments for a lot of the great vehicles out there. So as the new lease incentives come out, new prices come down, used car values also come down.
Give me a sense here two with ACV, because you're dealing main with dealers, it's basically a wholesale network more or less. Here the types of dealers you're dealing with. Are these kind of single one off dealers, Hey, I got my you know you know Joe blows Ford, you know on Route ninety six, or are these more kind of those big kind of multi brand dealership. So with the kind of sale, everything under the sun.
At ACV we work with both.
We have some of the largest dealers in the country. Leveraging our products. We have several products.
One is ACV Auctions, and we also have a product that helps dealers source cars.
From consumers, and one third of all of those new car or franchise dealers are working with ACV. In addition, independent dealers, as you mentioned, are a big part off the independent used car sales.
We probably have around a third of the end penance or more working with ACV as well.
What kind of demand is there for hybrids versus evs versus ice vehicles.
So there's definitely today the highest demand for ice but plug in.
Hybrids because of the price point.
Price point, trust comfort, you know.
Electric vehicles, especially dealers buying these cars after we think about our network, our network of dealers are comfortable buying these.
So we've seen residuals.
Did come down early in the year quite a bit. With electric it kind of leveled out and just came down a little bit more. Plug in hybrids have stayed very strong.
Yeah. Yeah, I ask because a lot of people are leasing evs right now. You know, it's a way of testing out whether they want to permanently adopt this, and that means in about three years there's going to be a lot of supply coming onto market, maybe even too much, given you know, it's been a slow transition to evs from ice vehicles.
Yeah, I just think all this stuff levels and stuff out.
Every single one of these cars will get purchased at the end of lease, at the end of its term.
It just then corrects the price.
So every one of these there's a transaction price for every one of these assets, and we're obviously seeing now a lot more incentives for new evs and they will also drive the prices down.
Our expectations, though consumer expectations, the dealer expectations for that matter, kind of a little bit normal in terms of pricing, because there was a big disparity there, not just in used cars, but we saw that in new cars as well. I'm just wondering, have we gotten more in alignment.
There's definitely more alignment, but there's gaps of vehicles that dealers will definitely pay all the money for certain cars. So there's many consumers out there. Keep in mind, the age of vehicles stand the road is eleven years old, average age, highest it's ever been. So many consumers are sitting on vehicles that they would be surprised what dealers will pay for these cars.
And we power these.
Trade into for well over one thousand dealers across the country where consumer right in their driveway can put in their data, take pictures using artificial intelligence and get a number, and the number is actually pretty high. And so you've seen all the media on prices have come down, but there's still a lot of consumers out there, especially the consumers have bought cars five years and prior have incredible equity in these vehicles.
How do you see demand from consumers to upgrade their vehicles or to tread in their vehicles changing? If interest rates continue to decline and be it, I'll bet a little bit more slowly than perhaps people had projected at this earlier this month.
Yeah, the cost of capital drives obviously both new and used affordability opportunities. So we're already seeing it with new So as you're seeing interest rates come down, you're seeing the OEMs lean in on incentives. Yeah, as their cost to capital goes downd and I'm used, the same thing will happen.
So all of this.
At the end of day, the everyday household is thinking a monthly payment. So whether they buy a twenty five thousand dollars car or a thirty thousand dollars car, they're thinking, how do I pay three hundred and three hundred.
Fifty dollars a month.
It's like the reverse engineer it, that's right.
And so we're already seeing new get corrected. Used prices are going down as interest rates go down. It's going to be a really big factor for the everyday consumer.
To be able to buy these vehicles.
What's the growth story for ACV going forward. I mean, you guys have come a long way in a very short time, and a lot of people don't even know your name. I mean they might be familiar with the product here. Is there sort of a plan in place, I guess to not only just broaden the business, but also.
Just broad in the awareness of it. Yeah.
Our objective is we think both new car dealers and independent car dealers have unbelievable locations across the country. So think new car dealers, there's sixteen five hundred locations. As you all drive by these BMW stores, Mercedes stores, Forward stores. They need technology, they need the tools. They want to compete against those big box companies that come out of shows like this, and we're here to help them.
So think about ACV and some.
Of our products like clear Car are enabling technologies.
So think B to B two C.
So that when the everyday consumer wants transparency and trust.
And to value their vehicle, they're going to be able to go to that.
Local dealer, start in their driveway, show up, know the value of their car, and we're the ones going to be powering.
That all right, George's going to have to leave it there, a great conversation and a great product. George Shimone is the CEO of ACV