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Hello and welcome to this week’s edition of Beggs on the used Car Market, with data and insights on the used car market from Ricky Beggs and Black Book. What a week it has been with the editors being tuned into the online activity and getting on the physical auction lanes, while also getting to touch another majorly redesigned full-size utility, the 2015 Ford Expedition. We also had some interesting discussions within the industry regarding residual projections from Black Book. As more cars are being leased, the analytics revolving around lender and leasing company portfolios continues to get increased attention.
The movement in the market since the mid-point of 2014, and the overall increasing depreciation, has many talking about the level of current changes. I spent time this week in the field with several manufacturer representatives, and others connected to the rental industry, who are somewhat concerned about the visibility of the current changes. At least they did not disagree with the levels of changes being reported.
One thing we as consumers also can’t complain about is the change in gas prices at the pump. We have had lower week over week prices for the past seven weeks, this week dropping by another $.03 to a national average price of $3.47, which is $.08 below year ago price levels. Hopefully this trend we are currently in will continue to match or even beat the low price of the past year of $3.19, which was during the week of November 11, 2013.
The three smaller, more fuel efficient, and lower priced segments this past week had the larger percentage decline within the car segments. The Entry Level Cars at -1.62% and the Compact Cars and Entry Mid-size Cars both at -.65% were the better retention segments during most of the spring market. During the latter half of the year they are now catching up to their expected overall annual depreciation. In relation to current gas price trending, the demand for these more fuel efficient used models is not at the forefront.
Just like the cars, the trucks had larger overall average segment decline this past week as compared to the prior week. There was only one segment with a weekly change of greater than -.5% as the Cargo Minivans were at -.91%. In the better retention side of the market the Full-size Passenger Wagons were at -$1 this past week and are in a four week average change of -$10 per week. We feel there is a solid reason for this level of strength. Often times a change in the new model will cause a significant variance in normal movement, sometimes increasing the interest and value, while other times devaluing the older model even more than normal. This full size van segment is showing positive strength, we feel due to the almost total revamping of the type of vehicles in this segment. It is far from being just a refreshening. Due to this change and the introduction of models like the Promaster, the Transit and the Sprinter, the last of the traditional full-size vans have brought renewed interest and thus higher used values in this segment.
It seems the once daily announcements of another model being recalled have slowed tremendously. Recently Black Book took a look at some of the current recalls as well as some in previous years, and prepared a detailed white paper on the effects on the values of several models during and following the recalls. If you would like a full copy of this white paper, just drop me an email at rbeggs@BlackBookUSA.com.
This coming weekend and into next Monday brings us two items of interest. The tradition of college football returns and the final summer holiday, Labor Day, will be celebrated. Until these occur, we will be back on the auction lanes, gathering and reporting the current market. Have a great day and week!