Black Book noticed average-condition units gaining extra attention in the lanes last week. Why are dealers more interested in these vehicles? Black Book editorial director Ricky Beggs explained why during his weekly online video commentary, “Beggs on the Used Car Market.”

Before delving into a comparison about average- and clean-condition unit activity, Beggs pointed out that the total number of vehicles adjusted during the past week was 600 less per day than the previous almost record-level week. Editors found that the percentage with increasing adjustments continued at a “torrid pace,” coming in at 61 percent and extending a three-week run of 60-percent increases.

“As the data and market reports came steadily flowing into the editorial team where the analysis progressed, it was prevalent as to the need for used vehicles for retail-level offerings,” Beggs said. “When demand is present, prices will generally increase or at least stay stable.

“A variant in the adjustments this week related to the interest and values of average condition values in relation to clean condition values. Most weeks the number of vehicles adjusted in these two condition categories is very similar,” Beggs continued.

However, Black Book determined that this past week, almost 400 more average-condition vehicle values were adjusted in relation to clean and also at a higher percentage of increases — 62 percent versus 59 percent.

“We feel the drive in this variation is partly driven by the continued need for more price-conscious cars as we come to the end of the tax season sales,” Beggs said.

Black Book indicated the last time editors noticed a significant condition adjustment variation was the week ending Sept. 14. That’s when clean-condition values were the higher of the two segment adjustments in both number and percentage being increases.

Overall, Beggs insisted the market is “very stable” with segment average changes week over week settled at a $3 decline for car prices and a $3 uptick for truck prices. He noted the previous time the wholesale market displayed this level of stability was almost a year ago when car prices ticked up $1 for the week ending April 6. That same week, truck prices also edged $1 higher.

While car prices slipped by $3 last week, Beggs pointed out that seven of the 10 car segments posted increases. Dragging the overall figure lower were prices for prestige luxury cars and premium sporty cars, which decreased by $72 and $63, respectively.

However, the marks were the lowest declining amounts over the past five weeks for premium sporty cars and for four of the past five weeks for prestige luxury cars.

Black Book mentioned compact car prices (up $31) and upper midsize car prices (up $24) had the most positive movement this past week. Another positive note was that entry midsize cars prices have now increased for six consecutive weeks.

“The entry sporty cars and the full-size cars hopefully will be starting a positive trend in change after increasing this past week,” Beggs said.

Looking back at truck prices, Black Book determined seven of 14 segments moved higher last week.
Prices for compact SUVs led the way by rising $52 with a truck market leading six consecutive weeks of increasing values. Full-size pickup prices (up $30 this past week) have a solid market three-week increasing run,” according to Beggs.

Beggs wrapped up his latest commentary by looking ahead at what might happen during the remainder of the spring market.

“Hopefully a break in the winter weather for parts of the country where retail activity can have a little more consistency, thus more activity at the auctions as well, with trade-ins being consigned and buyers present needing to fill an empty hole or two hopefully bringing more interest to the lanes,” Beggs said.

“The delay in some of the retail traffic in those snow covered areas will create some pent-up demand,” he continued. “In time, the market will be there to cover the needs possibly with stronger values on some units.

“We are nearing the end of the tax season buying, but the $10,000 and under used car is still getting plenty of interest,” Beggs went on to say. “And even though gas at the pump is down for three weeks running, and now at 17 cents less than a year ago, the small sedans are still in demand at many auctions.”

Beggs’ video can be viewed below.

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