While the acceleration of wholesale prices moving higher dipped a bit, Black Book indicated dealerships with the most robust financial resources continue to have the best opportunity to secure used-vehicle inventory during the coronavirus pandemic.
Black Book specifically mentioned large operations such as CarMax and Carvana showing their “dominance in the lanes” as analysts released their latest COVID-19 Market Insights report earlier this week.
“The increase in pricing related to winning bids is forcing smaller buyers to step back from bidding for fear of getting stuck with high-priced inventory,” Black Book said in the report.
“The divide continues to grow between the smaller dealers and the larger outfits as the money required to purchase inventory increases and retail fails to increase at the same pace,” analysts continued. “The larger dealers are relying on financing and add-on services as a revenue stream to overcome the small retail margins, but this is hurting the smaller dealers that do not have these services to offer.”
No matter who is cutting the floorplan checks, the amount needed to get those vehicles is declining at least a little bit.
Based on its volume-weighted data, Black Book reported that overall car segment values increased 0.96% this past week, representing the smallest amount of upward movement in the past seven weeks when prices first started a rapid week-over-week run of increases.
Analysts pointed out the latest movement is in sharp contrast to the same week last year when overall car segments values decreased 0.27%.
When volume-weighting is applied, Black Book determined overall truck segment values (including pickups, SUVs and vans) increased by 1.04% last week, marking the first time during the rebounding of values that the increases in the truck space exceeded the car arena.
“Last week, the minivan and full-size van segments had small declines that were viewed as stability, but the stability didn’t last long with all segments once again increasing this past week,” analysts said. “However, it is notable that many were at a smaller pace than previous weeks.”
Turning back to the atmosphere in the lanes nowadays, Black Book mentioned another trend that might be making it more challenging for dealerships with less financial horsepower to secure inventory they want.
“The portion of the market that is showing some stabilization and a slight softening are the ‘edgier’ units — those with higher mileage and lower condition scores,” analysts said.
“At the onset of the pandemic, the lower price point of these vehicles made them desirable, but this is a portion of the market that is showing some stability now,” they continued.
“The demand has shifted now toward newer-model-year, lower-mileage, and clean condition units that provide a viable substitution for consumers that are in the market for a new vehicle,” Black Book went on to say.
Black Book wrapped up its latest observations with two other anecdotes.
“Last week values continued to rise, but we did experience a small increase in no-sales as sellers continue to raise their floors and buyers show some hesitancy around what the future holds for used cars,” analysts said.
“Auction volume is showing some regionality in trends with volume increasing, particularly of rental units, in portions of the country that have been harder hit by spikes in COVID-19 cases,” they continued.
“Additionally, in the past two weeks, we’ve seen pockets of damaged units being sold in various parts of the country with sellers taking advantage of the strong market for late-model vehicles,” Black Book concluded.
The International Automotive Remarketing Alliance (IARA) opened registration for its 2020 IARA Virtual Summer Roundtable, highlighting five unique characteristics of this event on tap for Aug. 20.
According to a news release, the IARA will be offering a virtual expo hall and unique sponsor positioning, opportunities for interactions between attendees, relevant topics and keynote speakers, plus bonus features and materials that will be available to registrants even after the conference is completed.
IARA explained the virtual conference will replace the original event that was scheduled for Aug. 18-20 in San Antonio.
Featured elements of the virtual conference include:
• Two keynote sessions, two roundtable panel discussions, and three simultaneous interactive sessions focusing on key business processes.
• Participation in online chats and the ability to ask questions during sessions.
• Access to contact exhibitors and sponsors via a virtual expo site; download information, schedule an appointment or live chat with representatives.
• Schedule time with other registrants via appointment scheduling.
• Connection to the conference via desktop computer, laptop or even smartphone using the mobile app feature
The keynote speakers for the conference include Blake Stratton, business consultant from Michael Hyatt & Co., who will present a four step-system designed to help individuals grow their businesses as well as Melinda Zabritski, Experian’s senior director of automotive financial solutions, who will examine several key areas of the automotive finance market and discuss how these trends will impact remarketing professionals.
“The industry is hungry for information, and the IARA is primed to provide leadership and content for this very important lifecycle of the remarketing industry,” IARA president Paul Seger said.
The first 200 registrants for the Virtual Conference will receive a show kit that includes added features designed to enhance the virtual experience.
“We’ve had very positive feedback about our recent webinar series, ‘The Road to Recovery,’ but the virtual conference will be a major event that will take us to next level and reflect IARA’s prominence as ‘The Voice of the Consignor,’” IARA executive director Tony Long said.
Registration for the event can be completed here. For more information or to learn more about the IARA, visit IARA.biz.
A 40-acre expansion of Copart’s Atlanta East location, which the online vehicle auction company announced on Friday, marks the second time Copart has expanded that location this year.
Copart said the expansion is a continuation of the execution of its capacity growth initiative.
This location is one of nine Copart locations in Georgia.
Copart’s Atlanta East auctions take place every Monday at 9 a.m. CT or 10 a.m. EST.
"We plan to use our people, process and technology to provide the best experience to buyers who purchase vehicles from our location," Copart Atlanta East general manager Tiffany Todd said in a news release.
Copart chief executive officer Jay Adair added, “We are thrilled that we can meet our customers’ growing needs by expanding the Atlanta East facility.”
Black Book highlighted activity in the lanes and dealership showrooms is on the upswing as the spring market continues to blossom.
This week’s Market Insights report detailed not only the latest price movements, but also anecdotes from Black Book’s representatives at sales nationwide that indicated dealers are in need of inventory because of upticks in buyer demand.
“Auto auctions are seeing high-sales conversion rates with active buyers,” Black Book executive vice president of operations Anil Goyal said.
“Spring market is in full swing, and affordable cars have the strongest demand,” Goyal continued in the latest report. “Subcompact cars led the market last week with the highest lift in valuation.”
Volume weighted, editors determined that overall car segment values increased by 0.17 percent last week. In comparison, Black Book reported car values on average softened by 0.25 percent during the previous four weeks.
Editors pointed out that the mainstream cars and sporty car segments showed a strong lift in values with those subcompact cars leading the way with a gain of 0.57 percent.
Again volume weighted, Black Book determined overall truck segment volume (including pickups, SUVs and vans) edged down just 0.07 percent last week. That level was just a fraction of the four-week average, which was a dip of 0.36 percent.
In the truck segment, editors said minivans showed the most lift in values, rising by 0.55 percent, while luxury SUVs showed the most declines with the full-size category dropping by 0.57 percent.
Turning to those stories from last week’s sales, Black Book offered this collection from its lane observers:
— From Michigan: “The market remains positive. Dealers are reporting a more active retail market, which has pushed more buyers and bidding at the auction.”
— From Nevada: “Several dealers stated that tax refunds are starting to flow into the market, which is welcome news.”
— From Massachusetts: “Everyone seemed happy as retail is gaining steam, especially in the used market. This was the best sale this year.”
— From Maryland: “One of the best sales I have ever witnessed. Out of the 95 vehicles consigned in the lane, only two failed to sell, and they all brought good money.”
— From Georgia: “The lower end of the market is being driven up by buyers willing to pay over market value for specific models. Also, the sport cars and convertibles are getting hot.”
Update on the specialty market
As they do at the beginning of each month, editors also relayed their updates from the specialty market. Here is the rundown from Black Book:
— Collectibles: Editors indicated the collectible car world has gotten off to a good start this year. Black Book reported the first two months of the year generated more than $500 million in sales, and the auctions held in association with the Amelia Island Concours d’Elegance added another $80 million.
— Recreational vehicles: Now that spring is here, Black Book highlighted that dealers are seeing an increase in floor traffic on their lots and strong interest at shows. “We have noted an uptick in volume for the second month in a row at the wholesale auctions as dealers continue to fill out their inventories,” editors said.
— Powersports: Black Book determined entry-level, affordable and mid-range units lead the way as the powersports market enters spring. “Warmer weather has brought most segments of the market significant increases in value, which is a welcome development as the retail selling season is upon us,” editors noted.
— Heavy duty: As more over the road trucks dropped in wholesale value, Black Book noticed a few others held their own while a couple actually went up.
— Medium duty: Editors closed by mentioning auction prices continue a downward trend as demand slows and new and used inventory increases.
