Black Book is seeing car values that bloomed during the spring market now wilting in the summer heat.
This week’s Black Book Market Insights report indicated nearly all car segments sustained a significant decline in values, signaling summer seasonality.
Conversely, editors noticed the truck space had three segments finish with an increase in value during the week.
“Depreciation in car segments has increased after the Spring season. Pickup trucks, which usually retain strength in the summer months, went up in values last week,” Black Book executive vice president of operations Anil Goyal said in the latest report.
According to volume-weighted data, Black Book determined overall car segment values decreased by 0.44% last week. That’s up from the four-week average decline of 0.32%.
Values of compact cars and prestige luxury cars dropped the most, sliding by 0.68% and 0.69%, respectively.
Again based on volume-weighted information, editors learned that overall truck segment values (including pickups, SUVs, and vans) dipped by 0.12% last week. That’s 2 basis points above the four-week average drop of 0.10%.
Among trucks, values of subcompact crossovers decreased the most, sliding by 0.72%.
Turning next to what Black Book observers spotted when watching the lanes at nearly 60 sales nationwide, a representative connected with an independent dealer in Arizona who described the competition for inventory.
“The price range that we look for our independent store is becoming more difficult to source,” the dealer said. “We look for clean vehicles in the $10,000 to $17,000 range and find ourselves competing more and more with the franchise stores as well as the independent dealers.”
In other parts of the country, active bidding by franchised and independent stores seemed to be brisk. Here is Black Book’s latest anecdotes:
—From Texas: “The auction inventory was low today, which kept the values up as bidding was brisk.”
—From Florida: “The market seemed slightly lower. The rental and lease lanes did well, but they seemed to have lowered their floors to make the deal.”
—From Illinois: “One of the buyers for a large retail chain of stores is reporting that business is good, and the prices remain elevated.”
With wholesale prices softening as summer officially arrives this week, Black Book is noticing that dealer activity is rebounding a bit at the auction even if action at their showrooms is not at an optimum level.
This week’s Market Insights report showed that values for both cars and trucks decreased at rates much above the average editors spotted during the past four weeks.
“Car segments are in a steady depreciation pattern, in line with seasonality. SUVs and pickups (except for luxury) show strong retention,” Black Book executive vice president of operations Anil Goyal said in the latest report.
Volume-weighted, editors indicated overall car segment values decreased by 0.46% last week. That figure is more than double what Black Book computed at the four-week average (down by 0.22%).
In the car space, Black Book noticed values of subcompact cars decreased the most, dropping by 0.90%
Again volume-weighted, editors determined overall truck segment values (including pickups, SUVs and vans) softened by 0.16% a week ago. Like with cars, that truck reading more than doubled the four-week average that came in at 0.07%.
Among trucks, Black Book found that values of subcompact luxury crossovers softened the most, sliding by 1.10%.
Turning next to the anecdotes Black Book representatives collected by attending nearly 60 sales nationwide, lane watchers shared these comments, including:
— From California: “The sale was active both on the floor and through the simulcast. Prices are holding firm for the most part.”
— From South Carolina: “We had a good crowd throughout the sale which was encouraging. Small and midsize SUVs were selling well today.”
— From Michigan: “Dealers are saying that difficulty with inventory acquisition along with below average retail business is currently holding them back.”
— From Illinois: “Prices were strong across the board today. Due to low inventories, even the vehicles with hail damage brought good money.”
Black Book’s lane watcher stationed at a sale in Pennsylvania succinctly summed up the dealer and wholesale price activity contained in the firm’s latest Market Insights report.
The Keystone State representative said, “The auction is simply not as active as it was just a couple of weeks ago.”
Editors noticed wholesale prices for both cars and trucks softened at greater rates last week than they had on average during the previous four weeks.
Volume-weighted, Black Book indicated overall car segment values decreased by 0.36% last week. In comparison, editors said market values for cars had decreased by 0.22% on average during the prior four-week period.
Among cars, editors reported values of prestige luxury cars, and full-size cars decreased the most, sliding by 0.63% and 0.62%, respectively.
Again looking at volume-weighted data, Black Book found that overall truck segment values (including pickups, SUVs and vans) decreased by 0.16% last week. Truck market values ticked down by 0.07% on average during the previous four weeks.
Values of sub-compact crossovers and sub-compact luxury crossovers declined the most as editors pinpointed the drops at 0.65% and 0.67%, respectively.
“The overall depreciation rises as buyer interest wanes a little after a strong spring market. Trucks are retaining values better than cars,” Black Book executive vice president of operations Anil Goyal said.
The latest report also included observations from other parts of the country since Black Book attends nearly 60 sales each week. The other anecdotes included:
— From South Carolina: “Cars in the rental lane were getting more interest than the SUVs and trucks due to the more aggressive floor prices on those units.”
— From Michigan: “The supply challenge continues with auction inventory being down along with fewer trades coming in.”
— From Tennessee: “The number of buyers bidding is below normal. The higher price vehicles are hard to sell creating opportunities for the smaller size SUVs.”
With dealership competition as fierce as ever and consumers further recognizing the value of used vehicles, vAuto wants to be sure its tools are as sharp as possible. On Wednesday, the company expanded its proprietary suite of market data to all Stockwave users.
The expansion included the introduction of vAuto’s Live Market View and Autotrader’s Scarcity Index.
Stockwave is a vAuto solution that can help dealers effectively and efficiently find and purchase vehicles from top wholesale sources all through a single platform. Through this expansion, Stockwave users — both independent and franchised dealerships — will gain access to valuable market data from vAuto and Autotrader to help them make more confident and informed used-vehicle purchase decisions.
While rising affordability concerns are causing new-vehicle sales volume to taper, vAuto insisted the used-vehicle market continues to hold strong. In fact, vAuto acknowledged dealerships may need to be more concerned about supply than demand.
To date, wholesale market growth and supply has largely been driven by off-lease vehicles. However, Cox Automotive calculations suggest off-lease volume will peak in 2019, indicating supply moving forward could become a major headwind for the used-vehicle market rather than demand itself.
Both independent and franchised dealers are starting to take notice, with approximately 33% of all dealers saying limited inventory is holding back their dealership, according to the Cox Automotive Dealer Sentiment Index for the second quarter of 2019. That’s an increase of 4 percentage points from last quarter.
“With the number of off-lease units at a peak and fewer consumers as a whole trading in their vehicles, the data and insights dealers have at their fingertips are more important than ever to ensure they are buying and selling the right inventory at the right time for the right price,” said Patrick Janes, business development director for Stockwave at vAuto.
“As supply changes, so must dealer inventory strategies. By introducing Stockwave Market Data, both independent and franchise dealers will be better equipped with information to acquire the inventory they need and capitalize on rising demand,” Janes continued.
Previously only available to Stockwave dealers with vAuto Provision, all standalone Stockwave dealerships will now also have open access to the following four key metrics right in the platform:
1. Autotrader Scarcity Index: Gives dealers an understanding of online search demand for a car relative to the number available in a given market area.
2. vAuto rBook Market Days Supply: Lets dealers know at a glance whether a vehicle is likely to sell fast, given competing cars in the market and recent sales.
3. vAuto rBook Adjusted Market Average Price: Uses proprietary technology to indicate what a vehicle’s real market average pricing is with inventory mileage from competitors factored in.
4. vAuto rBook Market Average Odometer: Specifies the average mileage of retail vehicles in a dealer’s given market.
“Having the Scarcity Index and Market Days Supply inside Stockwave will help my team save hours of scanning through search results to find the right cars,” said Craig White, pre-owned director at Ourisman Lexus of Rockville.
“What we used to track through static spreadsheets is now all in one dashboard and available at a quick glance, enabling my team to make split-second decisions on vehicles that weren’t even on our original buy list. We are now nimbler, able to monitor multiple auctions at once and effectively growing our used-vehicle volume to meet rising demand,” White went on to say.
Auto Remarketing recently hosted Janes as a part of a free webinar to share strategies on improving inventory management. That webinar is available here.
For more information on Stockwave, visit www.vauto.com/stockwavedata.
Manheim now has its first all-digital auction location: Manheim Tucson.
The Arizona auction is Manheim’s first to incorporate a 100% digital format, utilizing a four-lane setup where cars are parked in designated spots and sold to buyers both physically present at the facility and online.
An auctioneer has them up for sale digitally through oversized monitors that include enhanced images, barcode price scanning and condition report info.
Buyers and sellers can participate in person at the auction or online through Manheim Simulcast.
There was a ribbon-cutting late last month and the first sale had more than 300 bidders (online and in-lane combined) with a conversion rate of about 76%, Manheim said.
Though this facility is the first to go 100% digital, Manheim has rolled out more than 100 digital-only lanes at its locations throughout the country.
“Bringing the excitement of the auction to clients in a live, all-digital format is a key move in our broader digital strategy,” Manheim president Grace Huang said in a news release.
“With advanced vehicle information and imaging, we are able to deliver digital solutions that create greater confidence and efficiencies while delivering a safer auction experience for everyone,” Huang said.
Manheim Tucson will have its Digital Debut Grand Celebration on Wednesday, which will include a Total Resource Auctions sale at 9:30 a.m., the auction’s regular sale at 10 a.m., giveaways to the first 200 dealers in attendance and special sale incentives.
“Our team was so excited to be part of creating a new chapter in our company’s history,” Manheim general manager John Duplanty said in a news release. “Our main priority was to work closely with our clients, preparing them for the change and help them realize higher conversion and retention performance. This has been a big win for our buyers and sellers.”
Added Vinnie Da Cruz of Simply Sell it Now in Tempe, Ariz., “I see the benefits and efficiency of digital lanes. No emissions in the lanes, and the increased safety that comes with moving to a digital auction help prevent accidents from happening in physical lanes.
“In an industry such as the reselling of automobiles, to not accept technological growth is almost certain death,” he said.
Safety certainly continues to be a pressing topic through the entire auto auction industry.
Future of auction industry?
Looking forward, Manheim said this type of all-digital auction site may be an early peek at what the wholesale digital marketplace might look like down the road.
Wail Abushaar, dealer principal at Tucson’s Pioneer Automotive, said in the Manheim news release: “I think going with digital auctions — without driving the cars through the lanes — is a brave move the rest of the auction industry will look up to.”
Along those lines, ADESA announced this winter, as reported by Auto Remarketing correspondent Arlena Sawyers, that it had launched what it calls VirtuaLane at 20 of its North American auctions, where certain lanes at the auctions are digital only.
These efforts continue the strategy by Manheim, ADESA and the independent auctions, alike, to blend digital sale technology with brick-and-mortar sales.
At Manheim, 43 percent of sales in 2018 — and over 2 million transactions — involved a digital buyer, the company said.
“And we have seen that accelerate in recent years,” said Derek Hansen, Manheim’s vice president of off-site solutions, during a press conference at NADA Show 2019.
Similarly, at rival KAR Auction Services, which owns the ADESA auction chain, the breakdown in the wholesale mix is about 50-50 online/digital versus physical auction, chief executive Jim Hallett told Auto Remarketing at NADA.
Likewise, companies like Auction Edge and others are providing independent auctions with simulcasting capabilities and the ability to facilitate online/remote transactions.
This week’s Black Book Market Insights report showed the days’ supply of new full-size pickups currently sits at a four-year high, well above 100 days.
While editors are thinking automakers might push incentives to get those new trucks over the curb at franchised dealerships, Black Book isn’t seeing prices soften for full-size pickups moving down the lanes.
“The depreciation rates normalized last week after a strong spring market. Pickups continued to show strength in values,” Black Book executive vice president of operations Anil Goyal said in the latest report.
Volume-weighted, Black Book determined overall truck segment values (including pickups, SUVs and vans) decreased by just 0.08% last week. In comparison, truck values edged up by 0.03% on average during the previous four-week period.
As mentioned, editors noticed the values of pickups increased the most with full-size models rising 0.22% and small trucks climbing 0.47%.
Meanwhile, in the car space, Black Book’s volume-weighted data showed overall car segment values softened by 0.31% last week. That’s quite a bit more than the four-week average, which was a 0.05% dip.
Among cars, editors indicated values of prestige luxury cars decreased the most, declining by 0.67%.
Turning next to what Black Book representatives in the lanes saw at nearly 60 sales nationwide, the anecdotes reflected a mixed bag of observations. Here is the rundown:
— From Michigan: “Consignment has been low, which would normally result in high sales percentages, but lower retail demand has had an effect.”
— From Florida: “We had a good sale this week. However, some of the franchise dealers mentioned slow retail sales.”
— From South Carolina: “More no-sales, and the values seem to be slipping a bit.”
— From Massachusetts: “All but one of the commercial consignors reported good sales today.”
— From California: “The southern California market remains good with the bank/repo lanes performing the best today.”
Update on the specialty market
As they do at the beginning of each month, Black Book editors gave a report about what’s happening in the specialty markets. Here is what they said:
— Collectibles: “This has been a great year so far for collectible vehicle auctions, and the two most recent sales did not disappoint.”
— Recreational vehicles: “As we make the transition from the end of spring to the beginning of summer, interest in used RVs remains strong. Dealers are reporting good traffic on their lots and websites, and the auction companies have seen their volumes rise a significant amount.”
— Powersports: “As we near the high point of the year for the powersports market, values are up nearly across the board, but by fairly modest amounts in most segments this month.”
— Heavy duty: “Higher mileage units continue to enter the market while demand remains steady, leaving buyers with no option but to purchase less desirable units.”
— Medium duty: “Steady volume is helping keep downward pressure on the overall market as used prices continue to depreciate.”
Rick Griskie has a simple way of describing the new “natural language” search functionality on ADESA.com that the company says makes finding vehicles faster, easier and more robust. He describes it as a “Google-like search.”
Griskie, who is ADESA’s chief information officer, explains that today, most people find vehicles through features. The searcher first enters the manufacturer such as Ford. Then the system asks the searcher to choose from a list of models, such as an F-150. Then, the user must drill down through additional filters, which Griskie describes as “quite cumbersome.”
“Natural language search, quite frankly, is what Google introduced us to when they came on the scene a number of years ago, where instead of using filters and drop downs, you just started typing in the … search box what you’re looking for,” Griskie said in a phone interview Wednesday.
ADESA said in a news release that its new search capability uses what it describes as “the leading cloud-based search technology,” which can return up to 400,000 vehicles in less than two seconds. ADESA said that is six times faster than before.
The natural-language capability is a first for the remarketing industry, ADESA said. The enhancement, paired with ADESA.com’s advanced filter options and canonical database, substantially reduces the time a user spends searching for the right vehicles, the company said, adding that it improves productivity and profitability for dealers of all sizes and sales volumes.
Griskie also explained the canonical data in a simplified way, describing it as a “decoder ring,” and mentioning the usual search through make, model, and trim.
“However the data we receive from the numerous disparate sources of that data [doesn’t] follow the make, model, trim very cleanly,” he said. “So we’ve created a canonical database that is effectively the decoder ring. So for example, in the trim field for many of the data sets that we receive, trim is blank. But we’ve created a proprietary way to ascertain what trim that vehicle really is, and that goes back to our canonical database. And then more people that use our natural language search, the smarter that canonical database becomes based on what people are searching for,” he said.
Griskie added in a news release that “The most crucial activity for dealers sourcing inventory is vehicle search.”
“Our search now rivals anything you’d find in the online shopping space. It works even when customers misspell an entry. Plus, it learns from itself, quickly adapting to help buyers more effectively with repeated use and giving customers more of what they want and less of what they don’t want,” he said.
Dealers likely set their sights on retailing used vehicles during Memorial Day weekend rather than being quite as active in securing more inventory from the lanes last week.
The collection of data and observations included in Black Book’s latest Market Insights report offered a variety of evidence to indicate the wholesale landscape is transitioning from spring to summer.
“The spring market uptrend is over, but prices remain stable. The late-model and lower-priced vehicles have the strongest demand,” Black Book executive vice president of operations Anil Goyal said in the latest report.
Reflecting what Goyal noted, editors said their volume-weighted data showed overall car segment values decreased by 0.17% last week. In comparison, car values edged up by 0.02% on average during the prior four-week period.
Within cars, Black Book reported values of high-line vehicles — luxury cars, prestige luxury cars and premium sporty cars — decreased the most, softening by 0.54%, 0.64% and 0.66%, respectively.
Again, looking at volume-weighted data, editors noticed overall truck segment values (including pickups, SUVs, and vans) remained nearly flat, ticking down by just 0.01%. Truck prices have been stable during the past four weeks, edging up by 0.04% on average.
Perhaps frustrating dealers who need them, Black Book pointed out values of full-size pickups increased the most, rising by 0.19%.
Black Book’s anecdotes from the lanes after attending nearly 60 sales nationwide began with an auction owner in Washington.
“The market has slipped a little in the last couple of weeks, but the 30-40K-mile, late-model vehicles are very strong,” the auction owner said.
Editors gathered other recaps primarily west of the Mississippi River, including:
— From Florida: “The buyers were not as motivated today. The rental and lease lanes lacked variety resulting in lower sales percentages.”
— From Pennsylvania: “The market is slower after a strong March/April push. One of the lanes, which had mostly $10,000-range vehicles, sold almost all of them.”
— From Massachusetts: “A mixed bag in the lanes today, but the overall market was flat or slightly down.”
— From Ohio: “Low-sales rate results in a captive finance consignor lane where the floors were being held high.”
Along with touching on the latest certified pre-owned sales data he could share, KAR Auction Services chief economist Tom Kontos used a gardening analogy to describe how the spring wholesale market reached “full bloom in April.”
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, analysts reported that wholesale used vehicle prices in April averaged $11,489, up 3.6% compared to March and up 3.4% relative to April of last year.
Kontos noted full-size cars and minivans were the only segments that did not show month-over-month average price increases, and their declines were modest.
The spring/tax season market reached full bloom in April as average wholesale prices reached what will likely be peak or near-peak levels for the year based on historical seasonal trends,” he said in the latest Kontos Kommentary released just before Memorial Day weekend.
“Car prices moved in parity with truck prices overall on a month-over-month basis and showed particular strength in the off-lease segment at physical auctions,” Kontos added.
Kontos continued his regular analysis by revisiting trends involving units that typically can be within a dealership’s CPO inventory.
When holding constant for sale type, model-year age, mileage, and model class segment — using criteria that characterize off-lease units — Kontos discovered prices jumped significantly on a year-over-year basis for midsize cars but dropped substantially for midsize SUV/CUVs.
Prices for those particular midsize cars climbed 4.5% or $542 to $12,648, while prices for those specific midsize SUV/CUVs softened 1.3% or $279 to $20,902.
Kontos went on to mention more ADESA data from April that revealed average wholesale prices for used vehicles remarketed by manufacturers rose 2.9% month-over-month but slid 1.6% year-over-year.
Prices for fleet/lease consignors increased 4.4% sequentially and 4.3% annually.
Average prices for dealer consignors moved 3.6% higher versus March and 1.1% relative to last April.
Finally, based on Edmunds data, Kontos recapped that retail used-vehicle sales by franchised dealers rose 3.8% year-over-year in April and 2.4% year-to-date.
He went on to point out April CPO sales dropped 12.6% from the prior month’s record levels but edged 1.3% higher year-over-year, according to figures from Autodata.
On a year-to-date basis, CPO sales are up 1.7% versus last year, Kontos concluded.
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
April 2019 |
March 2019 |
April 2018 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$11,489 |
$11,095 |
$11,116 |
3.6% |
3.4% |
| |
|
|
|
|
|
| Total Cars |
$8,942 |
$8,656 |
$8,778 |
3.3% |
1.9% |
| Compact Car |
$6,863 |
$6,716 |
$6,562 |
2.2% |
4.6% |
| Midsize Car |
$7,724 |
$7,564 |
$7,701 |
2.1% |
0.3% |
| Full-size Car |
$7,938 |
$7,996 |
$7,753 |
-0.7% |
2.4% |
| Luxury Car |
$13,862 |
$13,144 |
$13,474 |
5.5% |
2.9% |
| Sporty Car |
$14,790 |
$14,340 |
$14,625 |
3.1% |
1.1% |
| |
|
|
|
|
|
| Total Trucks |
$13,596 |
$13,145 |
$13,139 |
3.4% |
3.5% |
| Minivan |
$8,393 |
$8,408 |
$9,901 |
-0.2% |
-15.2% |
| Full-size Van |
$13,398 |
$13,283 |
$13,807 |
0.9% |
-3.0% |
| Compact SUV/CUV |
$11,367 |
$11,322 |
$11,096 |
0.4% |
2.4% |
| Midsize SUV/CUV |
$11,720 |
$11,371 |
$11,425 |
3.1% |
2.6% |
| Full-size SUV/CUV |
$15,203 |
$14,214 |
$13,878 |
7.0% |
9.6% |
| Luxury SUV/CUV |
$19,045 |
$18,281 |
$18,645 |
4.2% |
2.1% |
| Compact Pickup |
$10,655 |
$10,082 |
$9,407 |
5.7% |
13.3% |
| Full-size Pickup |
$16,914 |
$16,244 |
$16,137 |
4.1% |
4.8% |
Source: ADESA Analytical Services.
It’s spring, so that means a new crop of talented graduates have turned the page (and their tassels) and are about to enter the workforce.
But how do you attract the best and brightest of these to work for your auto auction?
That question is especially important amid recruiting challenges in the auction industry and as new business models emerge and competition stiffens.
One way to differentiate yourself as an employer — whether you are a traditional brick-and-mortar auction or an online auction — is through designation as a Best Auto Auction to Work For.
But there are just two days left to put your name in the hat.
To participate in this free workplace study and take your shot at this recognition, you must register here by end-of-day Friday: https://www.bestautoauctionstoworkfor.com.
Here’s a recap of what the program is all about.
Auto Remarketing’s Best Auctions to Work For, which is sponsored by CARS Recon, is a survey and awards program dedicated to identifying and recognizing the best employers and providing organizations with valuable employee feedback.
It is a free workplace study for the auto auction industry that recognizes the best auto auctions to work for on an unranked basis.
The program is designed and intended for individual brick-and-mortar auction locations, and for the second year, will include digital auctions, as well.
The study is divided into digital auctions and physical. It is absolutely free to participate.
Auto Remarketing, teaming with the Best Companies Group (BCG) in Pennsylvania, underwrites the study. The study is managed by BCG, and the data is analyzed 100 percent by the staff at BCG.
Again, to participate, auctions must register here by end-of-day Friday: https://www.bestautoauctionstoworkfor.com.
