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Why Are Used Car Values Showing Such Change?

Here is the latest used car market report from Black Book. As the feedback arrived from the Black Book survey personnel who attend the auctions across the country every week, what a variety of opinions were presented. From slow, to many no-sales, to a couple indicating a flat market with the other side of the spectrum described as buyer interest being up, pickups with strong activity and older units selling better. After these varied comments, where did the market actually finish after a week of editor analysis?

 

The first thing that really stood out was the increase in the number of 2013s that received their initial market-driven wholesale values. Even though this model year has been the toughest sell to complete in recent weeks, there have been enough actual transactions on the lanes to enable the Black Book editors to add in twenty-six different 2013 models with market based values.

 

For the past ten weeks gas prices have been on the decline, then this past week the national price at the pump went up by $.02. The past few years the increasing of gas prices hasn’t happened until around the first of July. I hope this slight increase this past week is not the beginning of an increasing trend, even as gas is $.25 a gallon less than one year ago.

 

The price of diesel has continued its decline after a peak of $4.16 back in the week of February 18, 2013. Even though car and utility vehicles with diesel engines is less than .8% of total sales so far in 2013, for those coming with diesel engines, the premium for diesel over gas presents a slower payback even with the increased fuel economy. At least those diesel powered units return a higher percentage of retention value than the gas counterparts in relation to new price.

 

Based on the survey personnel comments regarding the interest and strength of the pickups, the level of change overall of the fourteen truck type segments at +$2, and with the truck segments increasing in value for five of the past eight weeks, with the remaining three segments declining an average of -$2 per week, came as expected. There were seven of the fourteen segments increasing for the most recent week, matching the seven of fourteen increasing segments from one year ago. Of the seven increasing this past week, only two segments increased two weeks ago as well. Of those two, the Mid-size Pickups have increased seven of the past eight weeks, while the Compact SUVs, at a strong +$85 this past week, have been at increasing levels for eleven of the past twelve weeks. The Full-size Pickups, up by +$12 this past week have been positive moves for eight of the past ten weeks, while the Compact Pickups have increased for six of the past seven weeks.

 

There is another interesting trend within the car segments that tends to make one ask a few questions. For the third consecutive week none of the ten segments increased with the -$44 overall average segment change for the past week being the largest declining level over the past fourteen weeks. The more interesting trend involves the three segments that have been the most solid retention segments during the three month period of February 1 to May 1 for each of the past three years, the Entry Level Cars, the Entry Mid-size Cars and the Upper Mid-size Cars. Most recently, during the past four weeks, each of these segments declined. This is a complete turnaround from the previous seven weeks of increasing values for the Upper Mid-size Cars and the previous eight week of increases for the Entry Mid-size Cars. The Entry Level Cars had increased for six of the previous seven weeks prior to the most recent four week decline. The question is why the abrupt and opposite more recent trend?

 

These are some of the more fuel efficient vehicles which are not supporting the declining values with the also declining gas prices since the middle of February. We feel one has to only look at the overall average price of the cars within these three segments. With these segments being the three lowest priced segments, they come closer to being at the price point that gets attention during the spring tax market. Since the week ending April 19, 2013, these more affordable segments have been consistently softening in value.

 

Even with the overall declines within seventeen of the twenty-four segments, a comment from the New England area saying it is an “ok market” was echoed with a comment from the California market saying the activity was “nothing special”.

Views: 22

Tags: beggs, black, book, car, cars, dealers, pricing, ricky, usa, used, More…vehicles

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