To go along with his monthly look at the specialty market, Black Book managing editor Ricky Beggs opened 2012 by offering his forecast on how wholesale activity might unfold, as well as by taking a look back at how last year went.

The opening line of the current “Beggs on the Used Car Market,” video blog episode might have summarized what many dealers and auction executives thought about 2011.

“What a year in the auto industry,” Beggs declared.

“I am sure there will be many references to how the new and used markets reacted, as well as how finance played a role in helping the market climb the hill in 2011,” he continued.

“With new-car sales levels reaching close to 12.7 million, we still have a long way and a long time to go to reach the old traditional level of 16.0-plus million sales that will put strong used volume in the wholesale arenas,” Beggs acknowledged.

Beggs also touched on how the major events of last year might have kept 2011 from being even more productive for the industry.

“If not for the tsunami in Japan last March, multiple storms in the U.S. from hurricanes, tornados and flooding to go along with the stumbling economy in Europe, on top of consumers who weren’t overly excited about spending, we probably would have climbed out of the recession hole with a much higher new-car sales level,” Beggs conceded.

“Congratulations to an industry that refuses to stay knocked down,” he emphasized.

Black Book editors indicated that 2011 “finished on a pretty good note,” according to Beggs. They indicated that in the month with traditionally the least wholesale activity, monthly depreciation was only about 2 percent on used vehicles from two to six years old.

Black Book added yearly depreciation on these same models was less than half of what many anticipate — settling at 7.7 percent.

Beggs pointed out the segment types with the most significant depreciation year-over-year were full-size SUVs (15.4 percent) and midsize SUVs (12.6 percent). But he reiterated by kinds of SUVs both ended up well under the expected 18-percent annual depreciation.

Black Book mentioned there were seven of 24 segments with less than normal monthly depreciation levels during December, the traditionally weakest period. That trend was led by minor movements by compact SUVs (0.6 percent) and compact pickups (0.7 percent).

So what’s ahead? Beggs tried to answer that question next.

“At this time of the year I get asked quite often what I think will happen in the used-car market during the first half of the year,” Beggs began.

“We expect new-car sales levels to continue to climb, hopefully to at least 13.5 million,” he continued. “This creates another possible 700,000 to 800,000 potential trade-ins.

“But with end-of-term lease return volumes to bottom out this year, there will continue to be a tight supply of used vehicles, thus used values will be strong again this year,” Beggs projected.

The Black Book veteran then returned to the finance market to continue to his 2012 expectations.

“The lending part of the industry we feel will be aggressive again in overall approvals of even slightly lower beacon scores, increased advance amounts in relation to actual cash value and longer length of loan terms,” Beggs estimated.

“All these will contribute to getting more cars sold in the retail market,” he added.

Beggs moved on to another popular topic that sways what dealers do in the lanes — fuel costs.

“Gas prices will be another area we will be watching very close,” Beggs insisted.

“Even though there are no sources thinking average pump prices will jump higher than $3.85 per gallon, the recent report of an Iran/Iraq shipping access disagreement caused an overnight jump of 17 cent per gallon,” he continued. “Hopefully there won’t be much of this type news.”

Beggs wrapped up his expectations by touching on what’s in the near future, especially for buy-here, pay-here stores.

“It’s time to get ready for tax season as the under $10,000 units will be hot commodities,” Beggs noted.

“I have recently talked with several dealers who focus more on the BHPH type business, and they are all trying to load up with additional inventory also pushing values higher,” he continued.

“The bottom line, we will be on the lanes watching the physical on-site bidders and online bidders every week, reporting the market changes on a daily basis,” Beggs went on to say. “The Black Book mobile applications with regularly added new features will keep the most current market information in your hand, wherever you are.”

CPI Collectible Cars

After looking at the traditional wholesale market, Beggs turned his attention to specialty segments, beginning first with collectible cars.

Beggs thinks enthusiasts in the collectible vehicle industry are gearing up for the big January auctions in Scottsdale, Ariz., later on this month.

“Everybody is looking forward to the Barrett-Jackson, Russo and Steele and RM auctions, but did you know that Gooding, Silver and Bonhams will also be having sales? With this many different venues, there should be a car for everybody’s tastes and everybody’s budget,” Beggs projected.

“Many of these events will be televised, some live, so even if you can’t physically get out there to sunny Arizona, you should be able to see some of these beautiful automobiles cross the auction block,” he continued.

Black Book’s Eric Lawrence plans to be on hand for these events, “so be sure to say ‘Hi,’ if you run into him,” Beggs suggested.

Beggs moved on to a subject he thinks is in the back of many collectors’ minds.

“The big question is,” Beggs said, "’What kind of prices will we see at these auctions?’ Will there be a bunch of world record sales as in past years, or will the Grinch known as the recession take a bite out of the market?” 

Beggs’ response?

“Who knows? Some people tend to be a little freer with their money when on center stage in front of a few thousand cheering spectators, or on TV in front of millions,” he replied.

“What we do know is that the collectible market has been steadily improving over the past year,” Beggs continued.

All of the segments Black Book tracks are up from its last analysis two months ago with sports cars and exotics leading the upward charge at 2 percent and 4 percent, respectively.

Black Book mentioned muscle cars and pony cars are up 0.6 percent and 0.8 percent, respectively, with American classics and vintage pickups coming in at 0.4 and 0.2 percent higher.

“We will monitor what happens out in Arizona carefully and get the results into the CPI Value Guide as quickly as possible,” Beggs pledged.

Recreational Vehicles

Beggs started his RV commentary by stating Black Book is compiling solid data about how prices are moving.

“As we turn to the RV market and the turning of the page on the calendar, we are having good trending to the values of used units,” Beggs noted.

“Maybe it has been a very mild winter across most of the country so far, but nevertheless, typical winter patterns have been observed at the majority of the wholesale RV auctions we cover,” he continued.

“Volume is down, but not any more than we would expect for this time of the year,” he added.

Editors indicated wholesale used motor home prices at the major auctions have dropped $727 dollars (about 2 percent) on average. They pointed out that figure is much less than the $3,698 (9 percent) decline they saw a month earlier.

“If the seasonal patterns we have seen in the past repeat themselves, I expect to see another slight drop in motor home values once all of December’s data has been collected and analyzed,” Beggs surmised.

Black Book found towables, including travel trailers, fifth wheels and camping trailers actually rose slightly, ticking $386 higher or a little more than 4 percent.

“Oddly enough, this is a repeat of a pattern that we observed last year, when prices increased slightly for November before dipping a little bit in December,” Beggs shared.

“January is typically when values begin to rise again for both motor homes and towables, so don’t be surprised to see increased activity and prices at the auctions this coming month as dealers stock up for the spring selling season and lenders sell off any units they have been holding back during the slower months,” he projected.

Motorcycles and Powersports

Turning next to motorcycles and powersports, Beggs again spotted positive trends for these units.

“The last of the toys within the specialty markets, the motorcycles and powersports, are also showing good values overall as we head into the New Year with higher prices in the powersports market,” Beggs indicated.

“After the last several months of negative news for most of the segments we cover in the motorcycle and powersports guide, things are finally taking a positive turn,” he added.

Black Book discovered prices moved higher across the board for everything from ATVs and dirt bikes to cruisers and scooters.

“Normally this would be expected heading into a new calendar year, but things have not been normal for quite some time,” Beggs acknowledged.

Editors pointed out that the final quarter of last year saw unusually depressed pricing compared to past years, coupled with a scarcity of units at auction.

“Normally those two things don’t go together with a lack of units normally translating into higher than normal prices,” Beggs explained.

“The lowered volumes seen at auction are easily explained by the lowered production numbers since the economy tanked in 2008,” he continued. “The tighter loan origination standards during the time period of the struggling economy produced fewer but better loans, therefore creating fewer repossessions to remarket today.

“The unusually low pricing we have seen, especially when paired with the reduced availability of inventory, reflect a continuing lack of confidence in the economy by retail consumers,” Beggs went on to say.

Black Book determined prices for motorcycles climbed a little more than 2 percent on average for street bikes, cruisers, scooters and on/off road bikes.

Within this overall 2-percent increase, the V-Twin heavy cruisers are not up by quite as much as some of the smaller displacement metric units, indicating that there are still plenty of customers out there looking to stretch a dollar and emphasizing value in their purchase decisions,” Beggs highlighted.

Black Book also noticed ATVs and utility vehicles ticked up by combined 1.6 percent versus last month’s values.

“Most of these increases in value appear to be coming from dealers starting to slowly build inventory for the spring,” Beggs surmised.

“This is a trend we usually start seeing a little earlier than has occurred this season, but it is finally underway,” he continued.

Furthermore, editors found snowmobile prices moved higher again but not by as much as might be expected considering the time of year. Prices only rose 1.4 percent or an average of about $40 a unit.

Beggs added prices for personal watercraft and jet boats softened again as well, but by much smaller amounts than last month. The average decreases were about 2.4 percent. 

Medium-Duty Specialty

Beggs finished his look at the specialty market by analyzing medium-duty units.

“For the workhorse segment of the specialty market over the past several months, we have focused on our reporting of the Class 8 tractors,” Beggs recalled.

“This is probably because of the trending of values being so strong and the ultimate retail interest in these models, he continued.

To change things up a bit, Beggs offered an overview of the medium-duty models, the interest in these models and noted how steady this division of the commercial trucks has been.

To illustrate an example, Beggs discussed three-year-old medium duty trucks, noting prices for these units have fluctuated up and down between $2,000 and $4,000 depending on the vehicle during the last two years.

As a result, Beggs insisted prices of most of the units in this segment are within $1,000 of what they were two years ago.

“A big reason for this is the overall lack of vehicles out there,” Beggs explained. “The last several months has seen the prices moving up on most of the medium-duty segment.

“For the first time in a while, we have seen some downward movement,” he continued. “This has accrued for the most part on the 2010–2005 model years. We have seen the continued upward movement on the older model years from 2004 back.

“In both cases, the adjustments, up or down, have been minimal,” Beggs pointed out. “Sales of new units have picked up the last few months of the year, but as we go into the New Year, will that have an effect on the wholesale side? That is why we are here, as we will be watching the market and reporting as it happens.”

Beggs concluded his videos by stating, “We welcome your calls or e-mails. We wish for each of you an exciting and blessed New Year.”

Beggs’ videos can be viewed here.