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Following is this week’s edition of Beggs on the Used Car Market. What a variety of comments we received throughout this past week from dealers around the country. From the Pennsylvania market the “demand seemed to be up”, while not too far away geographically at an Indiana auction the feeling was that “prices seem to be dropping”. A Michigan report felt that there was an unusually higher number of rougher condition and higher mileage vehicles being offered.
The video market report last week from John Brasher at Brasher’s Sacramento Auto Auction referenced the recent strong new car sales in their market area and also across the country during September, that has created some extra inventory for the auction lanes. But with dealers in his area still needing used inventory, the values are holding well in a time when the market traditionally declines more than the rest of the year. Another piece of the market John mentioned was the softness in many of the rental car offerings. This trend was prevalent to our own editors who commented on the low sales conversions of these rental offerings all throughout the week. Something will give, and Black Book will be on the lanes to be the first to report this market activity.
As we take a look at the various segments of vehicles, the cars actually improved overall with the average segment change being -$61, the lowest decline in the past 10 weeks all the way back to the week ending August 10, 2012. For the first time I can remember, without digging too far back in the historical archives of data, the Near Luxury Cars (NLC) had the smallest dollar declining amount of only -$18. There is nothing to indicate a changing pattern of slower depreciation is taking hold here. The Entry Mid-size Cars (EMC) at -$23 had their best, or smallest, depreciation weekly change in over 3 months.
The truck segments, which had an average segment change of -$52 are gradually falling more. This is the first time in the past 7 weeks where none of the truck segments had a positive week over week change. The Mid-size Pickups (MPT) had the best strength with only a -$7 decline for the week. A couple of segments used primarily in the service industries were the Full-size Cargo Vans (FVC) and the Cargo Minivans (MVC) with market changes at -$8 and -$14 respectively. The Full-size Cargo Vans are averaging a -$17 change over the past 6 weeks, a pretty solid level of retention. Only the Compact Pickups (CPT) at -$29 this past week have a better 6 week average change, primarily due to 3 weeks of weekly increasing values.
What do we anticipate for this week within the wholesale markets? There is still a solid need for used inventory for retail, but in this fall season the buyers are looking for slightly lower acquisition prices. Even though the consignment is growing, we do not have an oversupply in relation to demand to suppress these fall market values at traditional seasonal levels. Vehicles that should hold the line on depreciation will be above the average condition 3 to 5 year old models. We expect Compact Pickups, Full-size Pickups (FPT) and Full-size Crossovers (FXU) to have the best and smallest percentage change with the Luxury Level Cars (LLC) to continue relatively low levels of percentage decline.
Black Book spent some time at the 96th AFSA annual meeting in Chicago this past week and we will be at the Auto Finance Summit presented by Royal Media Group and the Digital Dealer Conference, both in Las Vegas, this week. Lending and technology are hot topics in the new and used car arenas and Black Book has the tools and data to solidly support these segments, as well as the dealers who are putting their money on the line every day in stocking used inventory. Thanks for tuning in today and we look forward to seeing you in Vegas and on the auction lanes. Additionally, check out some of Black Book's latest insight in Automotive News and CBS Moneywatch.