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Here is this week's used-car market report for the week of Nov. 7, according to Black Book market data. The initial impact was the sudden loss of existing new and used sales which greatly altered the October new car sales totals and prohibited the SAAR from reaching September’s 14.9 million level. With the number of flooded cars expected to greatly exceed the 640,000 cars destroyed during Katrina’s destruction in 2005, the November number will depend upon available new car inventories getting built back up to at least pre-Sandy levels.
On the used side of the market, the current slightly soft seasonal declining market levels should come to a halt and probably get a positive bump in values. It should take a few weeks to see this and the reach out from the physically damaged areas could go to over half of the geographical country. With online auction listings, finding needed inventory is surely possible even in this existing level of tight used supplies. We will be on the lanes and analyzing loads of data feeds to report if and when any trend appears.
The industry will be focused on making sure the flooded and salvage vehicles get removed from the market. Nobody within the industry wants to be a part of a future problem as a result of flood damage. The history reporting service providers have the opportunity to greatly assist the industry in this monitoring. You can click on this link to see how Black Book supported the industry in telling Fox News how the industry is driven to monitor and eliminate the bad vehicles from staying in the market.
From auto lenders, who are so key in supporting solid sales of new and used, funding is available and at some of the best interest rates ever. The replacement vehicle loans just ahead may offer lower monthly payments for a new or better condition replacement vehicle.
Another question Black Book was asked quite often this past week related to what vehicles or segments will feel the most impact in demand, and wholesale price. Even though the 14 truck segments overall average change this past week was larger than the cars for the first time over the past 14 weeks, we don’t expect that to be the case within the next month. More specifically, the market demand for Full-size Pickups (FPT) and Full-size Cargo Vans (FVC) should exceed the remainder of the market due to existing market volumes of these type vehicles and the need within the construction and service industries with rebuilding the many damaged and totally destroyed homes and businesses.
Another market we expect to show an uptick in demand and used wholesale values will be the luxury type units, both cars and utility models. With leases being so high a penetration of total new sales in the area directly hit the hardest, these luxury manufacturers also represent higher overall lease penetration.
As I have already mentioned, it will take at least a week or so before any refilling of the damaged inventories will occur. The actual results from this past week show the current fall seasonal decline, combined with the traditional end of the month less aggressive bidding on the lanes.
The cars fared better than the trucks and also compared to the change level of the previous 4 weeks, this past week at -$65. 8 of the 10 car segments had a better (lower) decline than the total car segment average decline. Only the Prestige Sporty Cars (PSC) at -$151 and the Entry Sporty Cars (ESC) at -$76 had larger declining levels.
The truck market softened even more this past week with the overall segment average change at -$73, twenty dollars larger than the previous week and the largest change since the last week of this past July.