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Mid-November Used Car Market Report courtesy of Black Book:
There have been numerous headlines in the news over the last couple of weeks that could create or be a part of a reaction within the used car market. First is a continuation of the effects of Hurricane Sandy, which is now being followed up with an early Nor’easter dumping cold temperatures and wet snow. This second jolt to the people of New Jersey, New York and the surrounding areas didn’t damage cars and trucks, but definitely slammed the spirits of the people who still didn’t have power or heat in their homes as a result of Sandy.
The second industry issue came with the revelation that the 40 MPG ratings of several Hyundai and Kia models were being re-rated with refunds in the form of debit cards to the owners of an estimated over 900,000 vehicles.
The third out of the normal industry news item was the announcement that Suzuki would cease to sell automobiles in the U.S. markets, but remain in the motorcycle and powersports market as well as the marine engine market. The volumes had been so low over the last few years, and with only around 4000 new models still on the ground to be sold, we expect a rather easy wind down.
One of these three will result in more sales, both new and used, with expected increases in used values. The remaining two will not be positives, but are yet to be determined as to any reaction in the wholesale market. These are definitely on the radar screen of the Black Book editors.
The results of the past week’s activity have had to deal with continuing declining gas prices at the pump reaching $3.49 per gallon as of November 5th. We have reached this price after 4 weeks of declining gas prices totaling a $.35 change. We are now only $.07 per gallon higher than a year ago when prices were heading toward the low of $3.23 during the middle of December 2011.
The average segment change of cars at -$75 this past week was the largest weekly decline for the past 7 weeks. The largest individual segment declines were all from the higher level more luxury oriented type models of the Prestige Luxury Cars at -$187, the Premium Sporty Cars at -$142, the Luxury Level Cars at -$86 and the Near Luxury Cars at -81. Is it a coincidence that one year ago the top 3 declining segments were from this same mix?
The trucks average segment change is slightly better than the previous week but still a pretty significant -$70. The larger declines of the Full-size Crossovers (FXU) at -$170, the Luxury SUVs (LSU) at -$142 and the Mid-size Crossovers (MXU) at -$119, along with the -$87 of the Compact Crossovers (CXU) and the -$71 of the Mid-size SUVs (MSU) were the only segments with larger than the average of the 14 truck segment changes.
Even with the average segment changes at some pretty lofty levels, the comments from the Black Book survey personnel indicated a less aggressive seller leading to many more no sales. We think that especially on the eastern half of the country, this is a sign of the sellers anticipating an increase in demand to fill the needs created by Sandy. With three comments indicating the interest was strong on trucks, the segment change of -$37 on the Full-size Pickups (FPT) was the smallest decline for that segment type over the past 4 weeks.