When it comes to supply entering the wholesale market, look for that to be “higher than expected” the remainder of the year, Black Book said in its weekly COVID-19 Market Update released Tuesday.
But such high supply could be mitigated by strong retail demand, according to another analysis from J.D Power.
Driving the expectation for hefty supply are once-delayed lease returns making their way back into the market, rental car companies doing major de-fleeting, an increase in repossessions and the market needing to make up for lost auction activities during the spring, Black Book said.
Starting with lease returns, Black Book points out that amid manufacturing shutdowns during the pandemic, automakers started extending leases in an effort to have enough replacement vehicles once those leases were turned in.
“As a result, we project at least 560,000 additional units in the second part of 2020 (compared to the pre-COVID-19 estimates) due to a slowdown in sales in April / May, along with expected turn-ins of the lease extensions,” the company said.
In the rental arena, Black Book is expecting that off-rental volumes for 2020 will exceed pre-pandemic projects by 250,000 units.
“In addition to Hertz, we expect other rental companies to reduce their fleet during the summer and fall months to match lower demand for rentals,” the company said.
“This practice will lead to over 250,000 additional rental units hitting the wholesale market over the next six months. Note that this is a base case scenario in which rental companies (excluding Hertz) can gradually reduce their fleet instead of a rapid-fire sale.”
In a note sent via email, J.D. Power Valuation Services analysts point out that used-vehicle retail sales have been at a “robust” clip the past month, so dealers need replacement inventory, leading to a strong outlook on the pricing side.
“As such, concerns over an influx of off-rental and off-lease supply are moderating as these units are entering a welcoming market,” they said in the analysis. “Headwinds persist, however, especially as they relate to pandemic-related macro-economic volatility which may create additional friction in this channel as we move through July and August.”
In what also may be a mitigating factor, Cox Automotive chief economist Jonathan Smoke explained that the rolling seven-day used-vehicle supply, both wholesale and retail, is a bit low this week.
“Used supply has also been declining rapidly. Normally, retail supply is about 45 days. It remains low at 30, as of this weekend,” Smoke said in his latest weekly video update, which was released Tuesday..
“Wholesale supply is normally at 23 days. It was down to 26 this weekend. We may see wholesale supply below normal by mid-July,” he said.
Cox Automotive predicts in its CAMIO flipbook there will be 16.8 million vehicles needing to be wholesaled this year, which is consistent with year-ago figures.
Wholesale-price increases accelerated as June and likely the most tumultuous second quarter in anyone’s memory neared an end.
How long the fuel for that wholesale-price climb will last is almost as challenging to project as when the coronavirus pandemic will stop influencing the auction and dealership worlds.
Black Book, Cox Automotive and J.D. Power Valuation Services all shared how wholesale prices have increased in recent days, while Black Book reiterated its longer-term pricing forecast, too.
According to its latest COVID-19 Market Update released on Tuesday, Black Book indicated its volume-weighted data showed overall car segment values increased 1.91% this past week.
In fact, all car segments experienced increases, with the most notable jumped connected with summertime rides as the sporty car segment posted a gain of 2.45%. Analysts also noted the prestige luxury car segment was the only segment to have an increase of less than 1.0% this past week.
“However, it is still notable as this is a segment that rarely increases,” Black Book said in its report.
Meanwhile, Black Book’s volume-weighted data showed values in the overall truck segment — including pickups, SUVs and vans — increased by 1.15% last week with all segments rising except full-size vans.
Analysts mentioned the sub-compact crossover and sub-compact luxury crossover segments led the increases in the truck space at 2.53% and 2.52%, respectively.
“These segments have been slower to rebound compared to the larger compact crossover segment,” Black Book said.
Over at Cox Automotive, chief economist Jonathan Smoke touched on wholesale prices in Tuesday’s COVID-19 Auto Market Update video.
“Used-vehicle values keep rising,” Smoke said. “Average model-year 2017 wholesale prices increased 1.7% last week, and retail prices increased 0.6%. As of this weekend, wholesale prices are up 5.1% from the beginning of the year and 2.1% from the prior peak in Week 11, while retail prices are up 0.5% for the year.”
And J.D. Power Valuation Services senior director Larry Dixon sent a message to Auto Remarketing on Wednesday, recapping what wholesale-price movements that firm is seeing.
Dixon indicated wholesale prices have improved 22 percentage points during the past 10 weeks and are now 7% higher than at the beginning of March.
“Wholesale prices are exceptionally strong at the moment and the consistent growth week to week provides no indication that prices will fall materially near-term,” Dixon said. “The robust pace of retail sales since the end of May also supports a positive outlook, as dealer demand for replacement inventory remains high.”
Black Book included both a short-term outlook for wholesale prices, considering the rest of the summer and into fall, as well as long-term projections for 36-month residual values and where they might land by the summer and fall of 2023. Those forecasts are viewed through the prism of the most likely economic scenario as well as a more severe situation.
“We project a drop in wholesale prices compared to a pre-COVID-19 baseline this summer/fall, as the U.S economy suffers through the effects of COVID-19,” Black Book said in connection with the most likely scenario. “We anticipate that later this summer and fall, the wholesale prices will be between 10% and 15% lower than originally projected before the pandemic, due to a glut in supply and much weaker demand.
“Prices will start to recover in 2021 as the economy becomes stronger. We also anticipate that older (6-year-old), cheaper vehicles in average condition will not decline as much due to increased demand for these units,” analysts continued.
Under a severe recession scenario, Black Book analysts added, “We project a drop in wholesale prices of more than 20% later in the summer and fall, compared to a pre-COVID-19 baseline, with a slow recovery in 2021. The effects of the pandemic and recession will still be impactful in 36 months, and we project a 10% market level decline of wholesale prices as compared to pre-COVID-19 projections for the second half of 2023.”
Senior editor Joe Overby contributed to this report.
The first half of 2020 has been mired with challenges in the wholesale car market, but one particularly positive trend has emerged at the tail end of the of second quarter.
Auction sales volume have made a strong comeback and are now at or above year-ago figures, according to industry analyses.
In its weekly COVID-19 Market Update released Tuesday, Black Book said: “Despite most auctions continuing to operate under an all-digital platform, sales volume has rebounded to a level consistent with, and on some days higher, than this time last year.
“This is being driven by strong retail sales, which are then leading dealers to use auctions as their main source of inventory,” it said in the report.
Likewise, in his weekly video update, Cox Automotive chief economist Jonathan Smoke said Manheim auctions saw wholesale transactions climb more than 2% year-over-year last week.
And over at J.D. Power Valuation Services, their analysis found there were 108,000 auction sales last week.
This marked the fourth straight time weekly that auction sales exceed 100,000 units.
In fact, sales for the week ending June 28 wound up 7% stronger than what was projected before the pandemic, the company said in an emailed note.
In Tuesday’s update, Black Book said: “Sales this past week continued to be abundant and values are still increasing, as the lack of inventory on dealer lots had them actively bidding in an effort to secure vehicles.”
Looking further into the Black Book analysis, the latest data indicates that sales rates at auctions were at 67% the week of June 16, essentially steady with the 68% rate from the prior week. Sales rates have generally moved upward since bottoming out at 15% the week of March 30.
Sales rates have been above 60% the weeks of June 2, June 9 and June 16, according to the Black Book data, putting them back to where they were in late February and early March.
“At the onset of the pandemic, as shelter-in-place orders went into effect, sales rates quickly tumbled into the teens, but rates have been climbing each week and have now stabilized into a percentage that is typical of a springtime market,” Black Book said.
With the new July 15 federal tax filing deadline fast approaching, the 2020 tax season has been anything but typical.
This has added yet another disruptive layer to the developments that have buffeted the used auto market across the country.
Billions of undistributed dollars remain on the IRS balance sheet, throwing into flux our ability to assess factors that are traditionally applied to anticipate consumer spending on automotive purchases over the next few quarters.
Responding to challenges associated with the completely unexpected consequences of a tumultuous year will require the auto industry to revisit plans for harvesting tax refunds that may have been earmarked for vehicle purchases.
Taxpayers last year received an average of approximately $2,800 in refunds — a number that had remained pretty consistent in the boom market years leading up to March 2020. It was a trend that the auto industry had seen play out like clockwork, creating a dependable seasonal lift by arming deal-seeking buyers with healthy down payments.
The COVID-19 pandemic has changed everything, causing the market to try and figure out what consumers will do with refunds once they are remitted.
As of June 12, the total number of returns received by the IRS was only 5% lower than the same period last year. However, the number of returns that have been processed by the IRS are down 12%, while the number of refunds issued by the government is down 12%. As a result, there is $31 billion less in the pockets of taxpayers this year compared with last year.
With so many demand factors up in the air — including a level of unemployment that has not been seen since the Great Depression — the only reasonable projection to make is that the percentage of refunds that will be allocated to vehicle purchases will likely be lower year over year.
That said, the nature of the forces that caused the economic upheaval is expressing itself in very different ways across states — and within regions and counties.
Riding the full wave
There is growing evidence, for instance, of pent-up demand for vehicle purchases from those who kept their jobs but stayed out of the new- and used-vehicle market for the past few months. Despite this, demand for used-vehicle purchases remained remarkably strong, helped by the fact that new-vehicle production stalled as manufacturers halted operations for the lockdown.
This pause — in combination with a wholesale auction system that was broken for most of the past quarter — created inventory constraints that put upward pressure on used-vehicle prices.
As a result, now is a terrific opportunity for dealers to target taxpayers who have considered setting aside a portion of their refunds for vehicle purchases. It could help extend upward price pressure as counter-market trends begin to manifest themselves.
J.D. Power projections, for instance, expect the fall season to see dealer inventory normalize as off-lease and off-rental vehicles start to make their way back to the market.
This will cause prices to level off and perhaps even retreat slightly. As this happens, it will be extremely important for dealers to keep their finger on the pulse of key demand variables and put in place plans to capitalize on whatever demand emerges from the disbursement of delayed tax refunds.
In the meantime, the situation remains fluid.
Even if 2020 refunds fully match previous tax season levels, the extent to which cash is applied to making vehicle purchases will largely depend on consumer confidence in the economy. Our research shows that consumers are being much more cautious about spending — an emotional state that is largely outside the control of dealers and manufacturers.
What is clear is that consumers in different regions are responding differently to the current environment. Dealers will consequently need to plan accordingly and be ready to adapt quickly to the dynamics of their local community.
David Paris is senior manager of market insights, at J.D. Power Valuation Services.
Supplies and incentives are running a bit short in the new-car market.
And for cost-conscious shoppers, certified pre-owned may prove to be an attractive alternative, according to an analysis from Edmunds.
When June started, new-vehicle inventory levels were only two-thirds of what they were a year ago, Edmunds said, thanks to the impact of factory shutdowns during the pandemic.
And while automakers piled on new-car incentives at the pandemic’s outset, those are now “drying up,” Edmunds said in its analysis.
But CPO may offer a balance for those looking to save money, but also avoid the potential “risks” that can come with purchasing a used car. A 3-year-old certified vehicle has a 33% lower price tag, on average, than its new-car counterpart, Edmunds said.
“This Independence Day weekend might look a bit different than years past when it comes to incentives and deals on new vehicles, but the good news for price-conscious shoppers is that there’s plenty of value and selection in the used market,” said Jessica Caldwell, Edmunds’ executive director of insights, in a news release.
“For those concerned about the risks associated with buying used, a certified pre-owned vehicle might be a good compromise as it comes with a warranty and is generally newer with lower mileage,” Caldwell said. “And, thanks to a deluge of off-lease vehicles hitting the market, there’s a much wider selection of these vehicles for shoppers to choose from.”
Ivan Drury, who is senior manager of insights at Edmunds, added, “Many shoppers are unaware of the benefits of CPO vehicles, but given some of the financial uncertainties faced by so many Americans today, now is a great time for consumers to look into them as an alternative to new.
“These vehicles come pre-inspected, are required to meet automakers’ condition standards, and offer peace of mind with an extended warranty. Also, specific colors and features can change from must-haves to nice-to-haves when you’re looking at savings in the $10,000 range, especially on models that haven’t been redesigned in the last few years,” Drury said.
In the analysis, Edmunds shared a variety of models and the average savings between a new model and a 3-year-old CPO model. A chart detailing those savings can be found below.
An Edmunds spokesperson said via email that the company selected the vehicles below based on a few factors: high volumes (which was weighed most heavily), strongest CPO vs. new savings, and popularity/name recognition.
The chart and data below are courtesy of Edmunds.
Average Savings for 3-Year-Old Certified Pre-Owned Vehicles Compared to New
|
Vehicle Make/Model
|
Average 2017 Model-Year
CPO Vehicle Price
|
Average 2020 Model-Year
New Listing Price
|
Average Percentage Savings
for CPO Compared to New
|
Average Dollar Savings
for CPO Compared to New
|
|
Ford Explorer
|
$27,479
|
$48,577
|
-43.4%
|
$21,098
|
|
Nissan Sentra
|
$13,399
|
$20,910
|
-35.9%
|
$7,512
|
|
Toyota Camry
|
$17,497
|
$27,167
|
-35.6%
|
$9,670
|
|
Honda Accord
|
$17,997
|
$27,880
|
-35.4%
|
$9,883
|
|
Jeep Grand Cherokee
|
$26,900
|
$41,497
|
-35.2%
|
$14,597
|
|
Toyota RAV4
|
$20,847
|
$31,529
|
-33.9%
|
$10,682
|
|
Nissan Rogue
|
$18,299
|
$27,250
|
-32.8%
|
$8,951
|
|
Chevrolet Equinox
|
$18,390
|
$26,921
|
-31.7%
|
$8,531
|
|
Honda Civic
|
$16,711
|
$23,381
|
-28.5%
|
$6,670
|
|
Ford F-150
|
$33,169
|
$45,346
|
-26.9%
|
$12,176
|
The Blue Oval is providing a safety net for individuals who are considering a certified pre-owned vehicle, as well as a used or new model, and financing the deal through its captive.
In light of the unsettled economy impacted by COVID-19, Ford on Monday announced a program dubbed Ford Promise that gives consumers the option to return the vehicle in case customers lose their jobs within the first year of taking delivery.
Under the new Ford Promise program, customers who lease or purchase a vehicle with Ford Credit financing and then lose their job within a year can return the vehicle. Ford Credit will value the vehicle using the National Automobile Dealers Association average trade-in value, reduce the customer’s outstanding balance by that amount and waive up to an additional $15,000.
The OEM said the customer is responsible for any difference remaining.
In addition, the automaker indicated the customer is responsible for any late or deferred payments due and vehicle damage. Once the conditions are met, the account is reported as closed and paid, according to Ford.
“We feel like right now, the economy is at the stage of recovery where people want things to be back to normal, they want to buy, but they’re still a little nervous about what the future holds,” said Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service.
“We want them to know we understand that, and we’re here to support them in their buying decisions,” LaNeve continued in a news release.
An ad campaign, which launched on Monday, focuses on supporting consumers eager to move forward, says Matt VanDyke, director, U.S. Marketing. “Customers are realizing it might take a while for things to completely feel normal again, if in fact, they ever do.”
Research from Cox Automotive found that at least 32 percent of potential customers are delaying automotive purchases, citing market uncertainty and fears of unemployment.
“They need our support now more than ever,” VanDyke said. “And it’s here, in an offer that applies to both new and used vehicles leased through Ford Credit. It just shows there’s no better place to shop than at a Ford dealer.”
The program offers a simple solution to those who experience an involuntary job loss and are unsure how to meet their payments. Enrollment is open through Sept. 30.
A few other details Ford wanted to share:
— Ford Promise covers 2019, 2020 and 2021 purchased or leased new, used and certified pre-owned vehicles financed through Ford Credit.
— Vehicles must be for personal use only; commercial use contracts are ineligible.
— The complimentary protection begins 30 days after vehicle purchase or lease.
— This initiative is the latest program by Ford that supports customers who may have been affected by the COVID-19 pandemic.
“Ford Credit has a long history of helping customers affected by all types of economic setbacks,” Ford Motor Credit chief executive officer Marion Harris said. “Now, we want to make sure that everyone who is considering purchasing or leasing a vehicle knows that this assistance is available.”
Other programs the Blue Oval has rolled out to stimulate sales have included:
— The Built to Lend a Hand program that allowed eligible new car customers in the U.S. to defer payments for up to three months and Ford to pay for three months – providing up to six months of payment peace of mind.
— A Ford Credit program that allowed existing U.S. customers affected by COVID-19 to call Ford Credit and discuss options such as payment deferrals if they were having payment difficulty.
“Our programs are adapting and evolving as our customers’ wants and needs change,” LaNeve said. “Ford Promise is simple and streamlined — it allows our customers to get into a vehicle without having to worry too much about what the future holds.”
For more information, visit the Ford Promise website.
In the face of disruption, be empathetic, patient, and open-minded – it will be better one day!
I wanted to take a few moments and look back at the last two economic shocks I've experienced in my automotive career.
It’s these experiences that can make us stronger and more resilient if we seek to embrace and tackle them the right way.
The Great Roller Coaster Ride of 2020
The last three months have been quite the roller coaster ride for our economy, the automotive industry and me personally.
As I take a moment to step back and think about what I have experienced over the last three months, my first thought comes to the conversation I had with my wife on March 1.
I was heading back to Virginia from Colorado when she said, “You know, this Coronavirus situation in China is not looking good. We're updating our force majeures in our contracts.”
My wife, Brooke, has a small family business that works with groups and provides shore excursions for cruise ship passengers who visit Coastal Virginia. Little did I know that in the next three months, virtually all of Brooke’s 2020 business would be canceled.
Fast forward two weeks, and we are in complete shutdown mode with virtually all states issuing stay-at-home orders. The governor of Virginia, the only governor who is a doctor, issued our stay-at-home orders until June 10 — basically three months!
Needless to say, I was very concerned about what this would mean for my family, our business, and the world in general.
My First Major Shock: $4.00 Gas
I started my automotive career with Enterprise Holdings in 2003. I was recruited into the remarketing department and my primary responsibilities were selling off-rental and off-lease vehicles directly to local dealers in Virginia. By 2008, our financial system was breaking down, global investment banks were going bankrupt, and the tipping point for the automotive industry was gas topping $4.00/gallon.
Rental car companies have some of the strictest cycle times in the remarketing industry. Cars HAD to be gone in 29 days. Selling all your inventory in 29 days or less is already very challenging. Combine that with the fact that it coincided with our annual “Fall Pull,” when we would pull our current and 1-year old models out of the fleet in the fall to make way for the inbound new-model-year units. You couldn’t ask for worse timing.
This requirement put extreme pressure on our entire sales team as The Great Recession started. I recall downloading our daily morning list of units to sell and seeing oceans of Tahoes, Suburbans, F-150s — basically the biggest offenders from a gas guzzling perspective.
We all very quickly realized after making our daily sales calls that there was basically ZERO appetite from our dealers for this product. Consumers were shifting rapidly and downsizing their SUVs and 4x4s to compact cars, sedans and hybrids.
I recall watching used Toyota Prius vehicles sell for more than new ones, which makes absolutely no sense in normal times. After we felt the pain of selling some of these gas-guzzling vehicles for prices less than market, Enterprise quickly stopped pulling them out of the fleet and kept renting them. Management stepped back from operating “business as usual” and figured out how to embrace the disruption and modify business practices to take advantage of it. We stopped the bleeding.
We continued working to sell as many vehicles as possible, for the highest possible prices in the fastest amount of time but we did so by hitting the road and expanding our dealer base to include as many independent dealers as possible. That strategy paid off because we uncovered new demand for our inventory which lessened the need to rely as much on our large franchise dealers. Those practices endure today and contribute to Enterprise’s success as a leading remarketer.
Cash for Clunkers
I’d be lying if I said the fall of 2008 through the beginning of summer 2009 was fun. Quite frankly, it was brutal.
Selling wholesale current model and 1-year-old vehicles to over-supplied dealers during the financial crisis was at the time, the biggest challenge I had ever faced in my career. Also, my first son was born in September 2008, and so dealing with the challenges at work while helping tend to a newborn certainly added to the chaos.
However, things did improve as we’ve seen they always do. The brightest sun shines after the rain. As we headed into the summer of 2009, our government launched The Car Allowance Rebate System, otherwise known as “Cash for Clunkers.”
Cash for Clunkers was a game-changer because it instantaneously stimulated demand from car buyers and sellers. Our dealers quickly started saying yes to our inventory instead of no. Cars were selling and for good prices.
I also recall hearing stories from dealers who had speculated with those trucks and SUVs at the bottom of the market, and now they were making a ridiculous amount of money on “the flip.” They too embraced the disruption, modified their business-as-usual practices and won big.
When times are tough and we are going through a downturn, things will improve, whether it’s through a government stimulus program, changes in strategy or sometimes just plain time.
A Bull Run
I decided to leave Enterprise at the end of 2012 to help build CarLotz.
We were a start-up at the time, and quite frankly, it was a scary move to make with a wife and two small kids. Enterprise is a fantastic company with great people, but to move up quickly, it helps to be mobile. Marrying a girl with deep roots in Virginia didn’t help my mobility, so it was time for me to bet on myself along with my new teammates at CarLotz.
It has been quite a run since 2012. Our team has built the only retail remarketing business in the United States and we currently have eight retail consignment centers in five states (Texas, Florida, Illinois, North Carolina and Virginia), with more regions opening soon.
We have partnered with hundreds of businesses, from local privately held companies all the way up to Fortune 500 businesses and some of the largest commercial consignors in the industry.
We have continued to grow year over year because of the net-retention increases (or what we call “lift”) our sellers receive versus their alternative channels. Our team is proud of the work we have done, but there is so much opportunity ahead of us.
My Sophomore Shock: COVID-19
2020 was shaping up to be a record-setting year for our company. Our largest commercial consignors had agreed to double down on their inventory assignments, based mainly on our 2019 sale results.
January and February ended up being very strong and March was set up to be our biggest month ever as a company. And then COVID-19 hit. We saw a significant drop in sales and leads to the point where we had to make some very difficult decisions.
We went from a team of 160 down to 30 in a matter of a week. I was one of the ones furloughed briefly and, while it was a tough pill to swallow, I understood that it wasn’t based on performance or results, but that demand had simply dropped off a cliff.
Fortunately, we’ve experienced a “V-shaped” recovery. We bottomed out the week of March 28, and every week since then, we have experienced increases in sales, leads and consignments. We are now above pre-COVID levels and ahead of where we were this time last year, which is extremely encouraging.
In addition, many of our furloughed teammates are back with us! What has been most interesting through this downturn is how our clients’ vehicles performed in the retail market during the last several months. The wholesale market started its freefall the week of March 15, when most shelter-in-place orders were issued.
It bottomed out the week of April 19, and as of this writing, has climbed back to pre-COVID levels. The lift our accounts earned during this time turned into thousands of additional dollars PER VEHICLE in proceeds back to their bottom line.
We are talking millions of dollars in aggregate. The reason this happened is because retail prices only decreased by a few percentage points compared to the 15% drop in the wholesale market. I’m confident that every one of our commercial accounts is very happy with their decision to incorporate retail remarketing into their overall remarketing strategy. It’s another great example of companies taking advantage of the disruption, leaning into it, and making sure they come out on top as a result.
What I’ve Learned
As I think back to my experiences through the last two disruptions, there is no doubt that we have all faced big challenges. Everything seems more difficult but in reality, I believe our mindset is what gets us through it. I’m a naturally optimistic and positive person. It’s the way I am wired.
Sure, there are times when I get frustrated, and it’s during these times that I reach out to my teammates for perspective, support and feedback. While The Great Recession and COVID-19 have been the biggest shocks and disruptions to our economy in my lifetime, I’m certain there will be more shocks to come.
We can use these experiences to take a step back and evaluate everything we do as business leaders and operators. Nobody knows what the future holds, but there are several key points I believe we can keep in mind as we operate through these challenging times:
1. Be empathetic: There are a lot of people hurting right now and we are ALL in this together
2. Have faith that things will improve: If I have learned anything over the last two economic shocks mentioned above, it’s that things WILL improve, and downturns don’t last forever. In fact, they can be relatively short lived and create a lot of opportunity
3. Be open minded: Just saying no because it’s “too hard” or “different than we are used to” or throwing your hands up will almost certainly mean missing out on real benefits and opportunities
4. Embrace Disruption: Companies that embrace change, try new ways of doing things and build a culture of disrupting themselves stand a much better chance to survive, thrive and WIN BIG.
Brent Garrett is director of commercial sales at CarLotz.
The wholesale vehicle market has reached a positive milestone in June, and this particular one had not occurred in more than three months.
According to the Used Market Update released by J.D. Power on Thursday, there were approximately 110,000 units sold at auction the week ending June 21, meaning each of the first three weeks of June had auction sales north of 100,000 units.
The last time this happened was the run of weeks ending March 1, March 8 and March 15, according to the J.D. Power data.
It also marks three consecutive weeks that post-virus actuals for auction sales volumes have exceed the pre-virus forecast.
The pre-virus forecast for the week ending June 21 was for 101,000 auction sales, meaning the actual amount beat the projection by roughly 9%.
The week ending June 21 also beat the previous week’s actual by 2,000 units.
Auction sales volumes have been on an upward trajectory since the week ending April 5, when they bottomed out at 18,000 units, according to the J.D. Power data.
Aside from a dip one week in late May, they have climbed each week since.
Looking at individual segments, the week ending June 21 showed compact cars midsize cars and large cars with the most auction sales growth, as their upticks were between 5% and 8%, according to J.D. Power. Small cars were down 5% in auction sales volume and midsize pickups were off 8%.
The rest of the mainstream segments had single-digit-percentage gains.
“On the premium side of the market, segments underperformed their mainstream counterparts,” the company said in the analysis. “Midsize and large premium car and SUV sales growth increased by an average of 9%. Remaining segments experienced mild declines for the week.”
Looking at the full year, Cox Automotive is projecting in its CAMIO Flipbook that there will be 16.8 million vehicles wholesaled in 2020, compared to 16.1 million a year ago.
Among the wholesale outflow channels, the company is projecting 10.2 million to be in traditional auctions, compared to 10.3 million last year.
Off-site/digital is expected to climb from 1.0 million to 1.1 million and direct-to-dealer/dealer-to-dealer is projected to come in at 4.9 million, up from 4.8 million.
Commercial direct-to-consumer is expected to remain at 700,000, according to the Cox Automotive data.
In this episode of the Auto Remarketing Podcast, Zubie chief executive officer Gary Tucker talks with senior editor Joe Overby about the pandemic's impact to fleet and rental markets, as well as trends in connectivity, shared mobility and much more.
Plus, Tucker explains the upgrades in the Zubie user experience, new partnerships for the company and connectivity's usage in remarketing.
To listen to the episode, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
COVID-19 forced Manheim Pennsylvania to postpone its 75th anniversary activities, so Manheim’s flagship auction location found another reason to celebrate.
In a news release distributed late last week, Manheim highlighted record vehicle demand from dealers in June resulted in the Keystone State location selling more than 8,200 of the approximately 10,000 vehicles offered for sale digitally during the week ending June 19.
The company indicated this digital sales week beat last year’s combined physical and digital sales week by almost 900 vehicles.
Using Simulcast, OVE.com and Manheim Express, officials said nearly 9,000 dealer buyers participated virtually, showing dealers’ ability to keep their businesses forward by leveraging the digital wholesale marketplace.
“While we weren’t able to host our in-lane anniversary sale in March due to COVID-19, we could not be happier about meeting the demand from dealers for vehicles during this most recent week in June,” said Joey Hughes, vice president and general manager at Manheim Pennsylvania.
“Even though we could not physically greet and see our clients this week, we are excited about continuing to help them be successful,” Hughes continued in the news release.
Due to COVID-19, Manheim shifted its 76 sites in the U.S. from physical to Simulcast-only sales beginning on March 16. This included closing all locations to clients and operating with limited staffing based on local and state directives.
To assist dealers during this time, Manheim recapped that it waived all Simulcast buy and sell fees and continues to do so today, and 90% of Manheim sites now offer clients the ability to preview inventory onsite.
Earlier this month, the company allowed sellers to represent vehicles on the block and piloted in-lane bidding at five of its sites beginning the week of June 22. Both decisions were made after establishing strict safety protocols based on COVID-19 guidance.
While in-lane physical sales with vehicle running down the lanes have halted, Manheim pointed out that used-vehicle demand is strong and dealers buying vehicles digitally has soared. This is evidenced by Simulcast participation nearly tripling since early April, Simulcast attendance hitting approximately 20,000 attendees each day starting in mid-June and experiencing an 81% increase in OVE.com sales in one week.
In addition, the company experienced approximately 1 million digital transactions from January through May, weeks ahead of the same time last year.
“We realize that moving to an all-digital format was a significant adjustment for our clients,” Manheim president Grace Huang said in the news release.
Our clients have shown great resiliency, resourcefulness and an ability to overcome challenges, and we thank them for their patience and support as we work together to keep our businesses moving forward in the safest way possible," Huang went on to say.
