Black Book recently shared its latest analysis that shed light on exactly how much of an impact the spring market generated this year.
According to Black Book data, the average price of a used vehicle for model years 2012 through 2016 increased in value by 0.3 percent during April, fueled by a strong spring selling season for cars.
Editors indicated car values ticked up 1.3 percent during the month while trucks saw a decrease of 0.4 percent.
Black Book added that all vehicles are averaging a 12-month softening of 15.1 percent.
A total of nine vehicle segments increased in overall value during spring, according to Black Book, including five car segments. Leading the way were midsize and compact cars, which each rose 2.5 percent in April.
Vehicles in midsize car segment include the Nissan Altima, Chrysler 200, Honda Accord, Ford Fusion, Toyota Camry, Chevrolet Malibu, Kia Optima and the Hyundai Sonata. Vehicles in this segment finished April with an average price of $9,732, which settled 15.5 percent lower than a year ago.
Vehicles in the compact car segment include the Chevrolet Cruze, Ford Focus, Honda Civic, Toyota Corolla, Volkswagen Jetta, Nissan Sentra and the Hyundai Elantra. Vehicles in this segment wrapped up April with an average price of $8,210; a figure down 13.7 percent from a year ago.
Black Book pointed out that sub-compact crossovers saw the largest boost for trucks, jumping 1.5 percent in April.
Vehicles in sub-compact crossover segment include the Buick Encore, Nissan Juke, Chevrolet Trax, Honda HR-V and the Jeep Renegade. Vehicles in this segment finished April with an average price of $11,652, representing a 15.6 percent drop from year-ago levels.
Editors noticed the other segments seeing increases in April included the full-size car (up 1.0 percent), compact crossover/SUV (up 0.5 percent), sub-compact car (up 0.5 percent), compact van (up 0.3 percent) and small pickup (up 0.1 percent).
Black Book also mentioned the two segments that saw the highest depreciation on the month included the full-size crossover/SUV, and midsize luxury CUV/SUV, each declining by 1.5 percent.
Vehicles in the full-size crossover/SUV segment include the Chevrolet Tahoe, Chevrolet Suburban, Dodge Durango, Ford Expedition, GMC Yukon, Toyota Sequoia and the Nissan Armada.
Vehicles in the midsize luxury CUV/SUV segment include the Lexus RX 350, Acura MDX, BMW X5, Buick Enclave, Infiniti QX60, Mercedes Benz M Class and the Lincoln MKX.
“The above-average strength of the spring season was on full display during April, with a total of nine vehicle segments showing an increase in value,” said Anil Goyal, executive vice president of operations at Black Book.
“What’s impressive most in April is that five of these segments were cars, so it will be interesting to see what the remaining of the year holds for these segments as we return to more typical seasonal depreciation patterns for vehicles overall,” Goyal continued.
Call it sales efficiency.
Though there was a slight decrease in the number of vehicles entering auto auctions last year, the members of the National Auto Auction Association actually sold more cars than they did in 2016 and at a higher price tag.
Just over 10 million vehicles were sold at NAAA-member auctions in 2017, which was up 2.5 percent over 2016 and represented $105.6 billion in sales, according to the association’s annual survey.
That $105.6 billion in gross value of units sold was up from $100 billion in 2016.
There were 17.32 million vehicles that entered the auction in 2017, compared to 17.74 million a year earlier. The percent sold climbed from 55.1 percent to 57.8 percent.
Average price per unit was up 3 percent at $10,544.
“The 2017 results are encouraging,” NAAA chief executive officer Frank Hackett said in a news release.
“The survey results show the strength and depth of a mature industry that has demonstrated its resiliency,” he said. “I am confident we'll continue to be a vital and growing part of our nation’s economy for years to come.”
Of the 10 million cars sold at auction, 50.3 percent were dealer consignment, with lease/fleet/repo next (43.2 percent).
OEM vehicles represented a 5.5-percent share, and 0.8 percent of the sales volume came from other sources, according to the survey.
The survey, which was conducted by Virginia-based Robert A. Casey Consulting, had a 71-percent response rate, as 244 North American NAAA members participated.
With more than seven days into May already in the books, Black Book is seeing even stronger signals that the spring market might be in its closing stages for 2018.
This week’s Black Book Market Insights report highlighted how most car values finally are cooling off from the last several weeks of increasing price activity. That being said, editors still spotted a handful of car segments still showing a slight uptick in values this past week.
“The market is shifting towards neutral as spring seasonality wears off. Non-luxury segments in small crossovers and sedans showed stability last week,” said Anil Goyal, executive vice president of operations at Black Book, in the analysis.
Volume-weighted, editors determined that overall car segment values barely increased by just 0.05 percent last week. In comparison, the market values for cars had risen by 0.24 percent during the prior week.
Within cars, Black Book reiterated that all non-luxury segments performed well with values stable to slightly up.
Again volume-weighted, editors noticed that overall truck segment values (including pickups, SUVs and vans) settled nearly flat. In comparison, the market values had decreased by just 0.06 percent during the previous week.
Within trucks, Black Book found that the subcompact luxury crossover segment performed the worst, softening by 0.48 percent of $80.
Moving on to what Black Book lane watchers observed at auctions, two of the four reports coming back into headquarters originated from Florida.
One representative shared, “The financial account reps did well and were selling most everything. The dealer lanes were better than they have been in a while.”
The other watcher added, “We had a lot of no-sales on the older inventory which was a pattern shift. Trucks and SUVs are still the center of attention.”
Next door in Georgia, some similar patterns were observed.
“Prices were strong all day in the manufacturer lanes. There was a fair amount of no-sales in the dealer lanes but the units that sold brought good money,” Black Book’s representative stationed in Georgia said. “Overall, vehicles 2-years-old or older sold well while the newer ones were hit or miss depending on condition.”
Finally, the anecdote out of the Midwest might have summarized the buzz in the lanes nationwide.
“The vehicles that sell bring good money, but there remains a shortage of clean, low-mileage units,” Black Book’s lane watcher in Indiana said.
Specialty markets update
As they do at the beginning of each month, Black Book editors recapped their latest assessments of the specialty markets. Here are their latest observations:
— Collectibles: Black Book indicated that there have been several successful collectible car auctions this spring. Editors pointed out that Barrett-Jackson’s Palm Beach sale, celebrating its 16th anniversary, was perhaps the most visible, as it was a four-day event and was extensively televised.
— Recreation vehicles: Black Book noted that RV values at auction, including most towable and motorized vehicle segments, decreased last month. “This is not typical for this time of year, as most dealers are scrambling to stock their lots before the first customers come in,” editors said.
— Powersports: Black Book insisted that cruisers are the “big winners this month,” as both metrics and domestic v-twins are showing solid gains as the powersports market enters its strongest portion of the year.
— Heavy-duty trucks: Editors said that wholesale prices are doing “exceptionally well,” with a small overall deprecation showing up on late models, while the older segment dropped a little more.
— Medium duty: Black Book explained that limited used supply is helping older units maintain their values slightly better than the late models. “In addition, new supply is helping to put some added pressure on late model units causing them to depreciate a bit more than they have in the past couple of months,” editors added.
Along with pinpointing what the Manheim Used Vehicle Value Index did in April, Cox Automotive experts also projected how much and why used-vehicle sales softened a bit last month.
According to Cox Automotive estimates, used-vehicle sales decreased by 2 percent year-over-year in April versus the same month last year. Analysts said the dip primarily stemmed as a result of having two fewer selling days.
Cox Automotive highlighted the annualized pace of used vehicle sales is up 1 percent over last year.
“We estimate the April used SAAR to be 39.7 million, the highest level in four months,” analysts said.
Cox Automotive mentioned April new-vehicle sales decreased, sliding by 5 percent year-over-year with two fewer selling days compared to April 2017. The April SAAR came in at 17.1 million, up from last year’s 17.0 million; it is the eighth straight month of more than 17 million SAAR and the fifth-best April SAAR on record.
Analysts added that cars continue to see sharp declines as sales in April fell 21 percent compared to last year, with major car segments’ having sales declines. They pointed out light trucks outperformed cars in April and were up 5 percent year-over-year.
Cox Automotive went on to note that the combined rental, commercial and government purchases of new vehicles climbed 7 percent year-over-year in April, led by increases in commercial (up 9 percent) and rental (up 7 percent) channels.
Analysts closed the discussion by saying new-vehicle inventories came in higher than 4 million units for the second straight month, and inventories are at their highest levels since June of last year.
Wholesale-price movements
Looking now at the wholesale space, Cox Automotive found that used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.33 percent month-over-month in April. This movement brought the Manheim Used Vehicle Value Index to 132.5, which was a 6.3 percent increase from a year ago and the highest level since last November.
“Looking at trends in weekly Manheim Market Report (MMR) prices, the traditional spring bounce this year started three weeks later than it did in 2016 and earlier years and peaked in April in week 15,” analysts said.
“Used-vehicle prices are now moving down but remain higher now compared to where they were at the beginning of the year than any of the last three years,” they continued.
On a year-over-year basis, Cox Automotive noticed all major market segments saw price gains in April. Compact cars and vans outperformed the overall market, climbing by 6.6 percent and 13.3 percent respectively.
Meanwhile, the latest index update showed SUV/CUVs and pickups underperformed the overall market, rising by 5.8 percent and 4.8 percent, respectively.
“Collectively, nonluxury vehicles outperformed the market, while luxury vehicles underperformed,” analysts said. “This is not unusual for the spring, as the observed bounce occurs only in nonluxury vehicles.
Also in the wholesale space, Cox Automotive determined that rental risk pricing strengthened.
Analysts found that the average price for rental risk units sold at auction in April jumped 9 percent year-over-year. Rental risk prices moved 2 percent higher compared to March.
The report mentioned average mileage for rental risk units in April (at 43,500 miles) came in 10 percent above a year ago but 3 percent lower month-over-month.
General economic update
Cox Automotive closed its latest analysis by highlighting the continued strong economic momentum on display in the U.S.
Analysts recapped that the economy grew 2.3 percent in the first quarter, a decline from last year’s overall growth of 2.5 percent, but much better than the first quarter of last year’s “lackluster” 1.2-percent growth.
Cox Automotive said the second quarter should see growth rebound in keeping with the expected 2.8 percent to 3.0 percent likely GDP growth for 2018.
Analysts added that consumer confidence rebounded in April after declining in March. The April index level was the second-best level going back to November 2000.
With perhaps a sign the spring market might be in its latter stage, a handful of car segments that have continued to increase in value, according to Black Book.
The latest Black Book Market Insights report showed smaller car and sporty car segments demonstrated the strongest price performance last week.
“Broad market strength was seen last week across most car and truck segments. Luxury segments are largely sitting out the extended spring rally this year,” said Anil Goyal, executive vice president of operations at Black Book
Volume-weighted, editors determined overall car segment values increased by 0.24 percent last week. That reading remains on par with what Black Book has noticed for a month as car values had increased on average by 0.23 percent per week during the previous four weeks.
Editors pointed out that the midsize car and sporty car segments increased the most in value last week, each climbing by 0.38 percent.
Again volume-weighted, Black Book found that overall truck segment values (including pickups, SUVs, and vans) decreased by just 0.06 percent last week. In comparison, the values had decreased on average by 0.13 percent per week during the previous four weeks.
Within trucks, editors noted the compact luxury crossover/SUV and midsize luxury crossover/SUV segments decreased the most in value last week at 0.38 percent and 0.34 percent, respectively.
Turning next to what Black Book representatives noticed in the lanes, the report surfacing in Florida indicated that perhaps the spring momentum might be starting to wane.
“The dealer consigned vehicles struggled mightily with an abundance of no-sales. The market here is experiencing a post-tax season adjustment,” the lane watcher in the Sunshine State.
Meanwhile, moving into the Midwest, the auction activity seems as robust as ever.
“The retail used vehicle market remains good here, so dealers are buying at auction. Full size SUVs remain scarce,” Black Book’s representative stationed in Indiana said.
Sliding East to Pennsylvania, auction is lively, especially when certain models roll over the block.
“Dealers are having difficulty finding and purchasing enough trucks and SUVs for their lots. Because of this shortage, prices remain strong on those models,” Black Book’s personnel from the Keystone State shared.
Finally, out in Colorado, the spring market might be changing there, too.
“It is still a sellers’ market in Colorado, but the momentum has recently slowed a bit,” Black Book’s representative said.
Dealers who use XLerate Group to acquire their inventory now have more financing flexibility.
XLerate Group announced on Tuesday that dealer floorplan company XLFunding is now available at all of its auction locations.
XLFunding is a full-service flooring company with flexible tiers, local title services and a simple credit line process for dealers.
As part of its ongoing commitment to introduce products and services that drive business growth for customers, XLerate Group started the floorplan source for local markets last year. XLFunding currently offers dealer funding at more than 100 auctions nationwide.
“XLFunding works with dealers using a consultative approach to find the correct flex terms and plan that match an individual dealer’s inventory and sales mix,” XLFunding president Curt Phillips said. “XLFunding is a locale-friendly option for dealer floor-planning needs with titles held right where you shop — your local auction.”
XLFunding is now accepting applications from dealers across the country, including:
— Arizona
— California
— Florida
— Indiana
— Illinois
— Michigan
— New Mexico
— New York
— South Carolina
— North Carolina
— Ohio
— Pennsylvania
— Texas
— Wisconsin
“We’re happy to have the industry expertise and strong leadership of Curt and his team,” XLerate Group chief executive officer Cam Hitchcock said.
“The XLFunding management team has over 50 years of combined floorplan finance experience working with the independent dealer and are focused on moving us forward in improving overall auction services,” Hitchcock went on to say.
Along with rolling out a new tool to help dealers find those “cherries” for their inventories, Black Book also released its Used Vehicle Retention Index for April showing that it remained unchanged from the previous month.
Editors indicated the index stayed at 112.0, while the reading has softened by 1.0 percent over the past 12 months.
The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on 2- to 6-year-old used vehicles, as percent of original typically-equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition.
Black Book noted that its monthly Index has only declined once during the last four months, dropping from 113.3 to 112.0 at the end of February. Much of this recent strength has come from a stronger-than-average spring selling season, with a handful of car segments seeing a rise during this stretch.
Since March, editors tabulated that compact-car prices have increased 2.5 percent and are up an impressive 3.4 percent during the past 12 months. Midsize cars prices are up 1.3 percent since March.
On the other hand, Black Book shared that prices for full-size pickups, full-size crossover/SUVs and sub-compact cars lost ground, declining by 0.7 percent, 1.6 percent, and 1.2 percent, respectively since March.
“The strength of several car segments over the last few months has been eye-opening, but it has certainly been helped by prices found with good value during this stretch along with rising gas prices,” said Anil Goyal, executive vice president of operations at Black Book.
“We expect that car values will soon return to a more seasonal pace of depreciation, fueled by still-high supplies in the broader market as we get into the summer months,” Goyal continued.
The index dates back to January 2005, where Black Book published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1 percent while during 2016, the index fell by just 6.4 percent.
During 2011, the index rose strongly from 113.3 to 123.0 by the end of the year as the economy picked up steam and used vehicle values rose higher. It continued to remain relatively stable, rising slightly until May of 2014 when it hit a peak of 128.1.
To obtain a copy of the latest Black Book Wholesale Value Index, go to this website.
Details about Black Book Cherry
In other company news, Black Book, released a new inventory recommendation solution named Black Book Cherry. Available on desktop or mobile, Black Book Cherry can help personalize dealers’ inventory discovery by automatically identifying the most desirable vehicles at auction, appropriately known as “cherries.”
Timely and efficient local auction research can help dealers gain a significant competitive edge by allowing them to spend less time trawling auction run lists and more time evaluating profitable vehicles. Available to all Black Book Digital mobile application subscribers, Black Book Cherry uses individual subscriber’s previous inventory preferences and behavior to filter run lists according to the dealer’s needs.
It is auction-agnostic and works nationally, according to a Black Book news release.
Additional functionality can allow users to “like” a vehicle, label it as a cherry, “dislike” a vehicle, or “share” a vehicle with a colleague or customer. As a result of continued use, the app becomes more intuitive and smarter with time as the users’ preferences develop.
Users are notified of new vehicles entering the marketplace , and at a glance, see the most exciting auctions and must-have inventory.
“I spend too much time searching for the right inventory and Cherry helps me find specific vehicles much faster,” said Cedrick Ferguson of F1 Motorsports. “It’s a great asset and useful for both dealerships and wholesalers.”
Black Book senior product manager Kyle Luck elaborated about Ferguson’s point.
“Most dealers spend hours each week reviewing auction run lists, trying to find the right car at the right price,” Luck said. “Without configuration, Black Book Cherry immediately adds value and intelligently connects automotive professionals with their ideal inventory. It’s automatic and it is fun too.”
With each subscription to Black Book Digital, users gain access to valuations, History Adjusted Valuations, and the new inventory discovery solution, Black Book Cherry.
For more information, call (800) 554-1026 or visit www.blackbook.com/cherry.
Wholesale growth isn’t just being experienced by corporately owned auctions as an independent operation in the Northwest is on quite a positive trajectory.
Doubling its business in less than 36 months has meant a lot of hard work for the team at Dealers Auto Auction of Idaho, but facility improvements and new consignors have put the auction on pace for a record-breaking 2018.
Back in January, the four-lane auction doubled its capacity by adding two double blocks. This enhancement allows all four lanes to run four streams of vehicles simultaneously.
DAA Idaho business development manager Britney Egbert explained that the move has resulted in more dealers in the lanes and a more efficient sale that ends about 90 minutes sooner.
General manager Russ Smith built the Nampa sale along with two partners in 2001. Today, the sale located just west of Boise, Idaho, runs about 450 units each Wednesday, and attracts 200 dealers, plus more who attend online.
“Because of the improved efficiency of moving the vehicles through the lanes, almost all the dealers now stay for the full sale,” Egbert said. “The auction starts at 9:15 a.m. and now ends at noon. That means they can be back in their offices for the afternoon. They can also stand in one spot and bid on any of four vehicles at once.”
While that move has helped to attract more dealer buyers, consignors have taken notice. Egbert said the auction now runs more Canadian units that are lease returns and has attracted more late-model, lower-mileage vehicles.
“We’re seeing more consignors wanting to bring their inventory here, and we’ve attracted more franchise dealer buyers in the lanes,” Egbert said.
The auction has also attracted more institutional consignors. Two of Idaho’s largest lenders are now regularly sending their inventory to DAA Idaho — CapEd (Capital Educators) Credit Union and Idaho Central Credit Union.
ARI’s title loan company has also become a DAA Idaho consignor, joining regular consignors that include LeasePlan USA, ARI, Westlake Financial, Lobel and UACC.
While improving efficiency and growing consignment and sales, expansion and facilities improvements have also taken place. After a delayed start due to an unusually heavy snowfall in early 2017, the auction added a new mechanic shop and expanded its detail center.
“We never get a lot of snow, but got hit with 3 to 4 feet and that delayed the construction,” Egbert said. “We’re up and running now and it’s been fantastic. We were able to hire more mechanics and are doing more pre- and post-sale inspections.
“We’re also doing light mechanical work like brakes, starters, alternators, tires, and oil changes. Our clients love the additional service, and that business has helped the bottom line here as well,” she continued.
Coming up this summer, DAA Idaho will host its Annual Classic Car Auction with nearly 100 vehicles. Last year’s sale garnered national attention, when the auction ran more than 65 classic vehicles from an Idaho farmer’s collection, and more than 100 total vehicles with a 96 percent sales rate.
The sale drew the attention of the national TV program, Strange Inheritance, which featured the auction prominently in its coverage of the story. Auto Remarketing also had a report about the event that’s available here.
The auction will also host its 7th Annual Country Charity Concert on Aug. 7-8. Last year, the event raised more than $20,000 for three area charities. This year’s concert will feature country entertainers Aaron Tippin, Restless Heart and Ira Dean.
Insurance Auto Auctions (IAA), a business unit of KAR Auction Services, has opened a new branch in Casper, Wyo.
With this move, IAA now has locations in all 50 states.
The company announced Friday that its new IAA Casper branch sits on eight acres of land, which provides enough room for any possible expansion in the future.
“We listened to our customers and are giving them more coverage in the western market with a place for more inventory — helping to reduce transportation time and costs and selling cycle times,” IAA chief executive officer and president John Kett said in a news release.
The new branch hosts sale days each Wednesday and preview days on Tuesdays, according to IAA.
“Our newest location in Casper, Wyoming secures our position as a leader in the salvage auction business and allows us to better serve our customers seamlessly across the nation,” added Kett.
The IAA Casper branch is located at 2305 Salt Creek Highway.
DriveTime retails a lot of metal to consumers through its nationwide footprint of dealerships.
Now the company wants to help its inventory buyers acquire necessary units from the wholesale space.
Earlier this week, DriveTime announced what it’s dubbed the “Genius Way to Buy a Car” at auctions with the launch of Buyonic.
Available on either desktop or mobile device, DriveTime explained Buyonic is an internally developed application to streamline, automate and reinvent the auction purchasing process.
“We’re excited about the features and early successes of Buyonic,” said Peter Hermes, managing director of inventory at DriveTime.
The features of Buyonic include:
• Pre-filtered vehicle lists guiding buy strategy and live auction actions
• Recommended purchase values
• Live performance tracking
• Capture estimated reconditioning value
• Real time adaptability on purchasing needs
“We began piloting Buyonic with our online buyers beginning in December of last year, and it is now in use with all of our in-lane and online buyers,” said Maureen Needham, director of IT for inventory at DriveTime.
“We are already planning enhancements including recommended delivery location and automated condition report evaluation,” Needham said.
Colin Bachinsky, vice president of inventory, elaborated as to why DriveTime is taking on this endeavor.
“While continuing to be a leader in automotive digital retailing, DriveTime is also innovating in other areas of our business,” Bachinsky said. “Long term, we expect our most recent innovation, Buyonic, to help us capture the entire inventory life cycle of auction, purchase and reconditioning data, allowing us to strategically use the information to win more bids at a better price with lower reconditioning costs, while continuing to provide our customers with high-quality vehicles.
“We’re just beginning to scratch the surface of the quality, efficiency and cost reduction opportunities,” he went on to say.
For more information on DriveTime, visit drivetime.com.
