J.D. Power research suggests the vehicle market will soon return to a more rational pricing structure

After a roller coaster ride in 2020, which saw the market — especially wholesale auctions — crash, used-vehicle prices exploded to historic highs in 2021. It is easy to forget that, before the pandemic, retention rates for 3-year-old vehicles typically topped out at 50 percent.

But by the time 2021 was put to bed, the retention rate for used vehicles in the same age range averaged a whopping 74 percent.

The momentum has been sustained well into 2022. In so doing, this prolonged trend has created a distorted view of the market for many on both sides of the buy-sell divide.

Consumers — and even some industry leaders — appear to have been lulled into believing that this trend will continue indefinitely.

As a result, the industry is currently engaged in an interesting game of musical chairs. While most veterans in the industry understand that current valuation levels are unsustainable, they are wrestling with the question of when the market will stabilize and how large their inventories will be when the music stops.

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