LAWRENCEVILLE, Ga. -

Perhaps the wholesale industry just ran out of collective gas during the second half of December after it already had experienced so many unprecedented challenges during a year no one is likely to forget.

Black Book said the last two weeks of 2020 “were fairly quiet on the auction lanes,” as analysts not only shared some closing observations about the year, but also a few initial suspicions about value and volume trends to begin 2021.

“Activity did increase marginally the week of New Year’s (Day) compared to the week prior with a small increase in the overall sales rate. However, many lanes had smaller levels of inventory offered for sale,” Black Book said in its latest installment of COVID-19 Market Insights released on Tuesday.

“Auctioneers had a tough job last week with many lanes requiring auctioneers to start $1,500 to $2,000 below market value to get the bids going to get a successful sale,” analysts continued.

“For many remarketers that we have spoken to, it is their sentiment that inventories are low so they are willing to wait to see if January will bring back the demand that was experienced over the summer,” analysts went on to say. “However, they do have mixed feelings on expectations of a traditional tax/spring season market bump.”

Black Book pointed out that demand weakened as the year culminated, stating the auction sales rate decreased about 15% in the closing weeks of 2020 compared to summertime.

On the retail front, Black Book highlighted that franchised dealers are reporting a “healthy” December, especially stores that had full-size trucks in their new-model inventory.

“The enticing incentives helped them to close out the year on a positive note,” analysts said in the report.

Used-vehicle retailing turned cold like the weather, according to Black Book’s sources in the retail world. But analysts pointed out that dealers suspect a potential turnaround warmed by fuel coming from the federal government.

“Sentiment is starting to change with the stimulus money beginning to be deposited into consumers’ bank accounts. Dealers are hoping this results in a strong January,” Black Book said.

However, when considering all factors, consignors might not see as favorable beginning to 2021 as other segments of the automotive industry.

“With expected weaker retail demand, even with the second (much smaller) federal stimulus, together with a projected increase of used inventory, we forecast a higher than seasonal drop in wholesale prices this winter,” Black Book said.

“It is worth noting that after record-breaking increases in wholesale prices over the summer, we are still well above pre-COVID-19 prices, so the projected drop over the winter months will simply get us back to the baseline,” analysts added.

Latest value movements

As they do in every installment of their COVID-19 Market Insights, analysts tracked the latest value movements on a weekly basis.

According to Black Book’s volume-weighted data, overall car segment values softened 0.70% over the last week, an increase from the depreciation reading of 0.62% recorded during the prior week. 

The streak of value declines for subcompact and compact cars now is halfway to the point of when a baby is conceived to being born. With the streak now at 19 weeks, analysts found that the decline run for compact cars continued with a drop of 0.84% with the drop for subcompact cars being even more at 0.92%.

“Premium sporty cars have continued to be the anomaly for the car segments throughout the pandemic with another week of limited declines,” Black Book said. In contrast to the smaller mainstream car segments, this segment has only had 11 weeks of declines for an average weekly (decrease) of 0.15%.”

Over in the truck department, Black Book’s volume-weighted information showed that values in the overall truck segment (including pickups, SUVs and vans) declined 0.33% last week. That’s slightly less than what analysts spotted a week earlier when the value drop came in at 0.35%. 

Not quite to the length registered by subcompact and compact cars, Black Book still pointed out how the value decline for minivans is significant. These units now have dropped for 17 consecutive weeks with them again being the leader among trucks with a drop of 0.78%. The average decline for minivans during this stretch is 0.72% per week. 

Also of note, Black Book noticed that full-size trucks slowed their value decline to finish 2020, slicing a 0.40% drop down to 0.21% during the last week of the year.