Retailers of consumer goods have been advertising discounts connected with Black Friday for several weeks now.
However, store managers looking to score a deal on used inventory like they might for a television or cookware might not be as successful.
Black Book conceded in its latest installment of Market Insights released on Tuesday that “values aren’t showing any signs of slowing down, with most expecting this strength to last through the traditional spring selling season.
“Sellers are holding firm to floors, with the expectation that if it doesn’t sell this week, it will the next week,” analysts added in the newest report, noting that overall vehicle values jumped another 0.64% during the week that closed on Saturday.
Taking a closer look at the car segment, Black Book determined prices on a volume-weighted basis moved even higher than the overall reading, with car prices rising 0.70%.
Analysts pointed out that all nine car segments reported value gains again last week, with near luxury cars leading the way with an increase of 1.03%.
“This is a segment that has a large lease penetration rate. And with this strong market, very few of those are making it to the auction lanes,” Black Book said.
Analysts added that even despite cooling temperatures, values for sporty cars (up 0.06%) and premium sporty cars (up 0.14%) generated gains again last week.
Meanwhile over in the truck department, Black Book said its volume-weighted information showed that overall truck values rose another 0.61% last week, as all 13 truck segments posted price gains.
Analysts indicated compact vans generated the largest value increase among trucks, rising 2.04% last week, “but the segment is very small in volume.”
“The sub-compact and compact crossover segments of both the mainstream and luxury variants are seeing large week-over-week increases,” analysts added while noting compact luxury (up 1.20%) and subcompact (up 1.13%) crossovers both had price increases exceeding 1% last week.
While it might not help dealers reduce their stress over securing inventory — or finding gifts for spouses, children and friends for that matter — Black Book tried to set the scene for what might be happening in the lanes as we move past Thanksgiving turkey and into the time of Christmas, Hannukah and Kwanzaa.
“As we go into the holiday season, the volume of newer used vehicles is typically expected to increase as lease returns and rental vehicles come back into the market, but this year will most likely look a little different,” analysts said. “New model year vehicles have been trickling into the lanes, but a significant portion of vehicles have been purchased upstream or come to the lanes damaged.
“With franchise dealers having more opportunities to buy inventory at grounding, the fierce competition in lane can be mostly attributed to large independent dealerships and rental companies,” analysts continued. “Inventory scarcity has caused bidding wars across the country. Wholesale values and floors continue to increase and give no indication of slowing down.
“The weekly estimated average sales rate has remained stable at the 70% mark for the second week in a row,” Black Book added. “This time last year, the estimated average weekly sales rate was around 51%, so while floor prices continue to rise, buyers continue to purchase vehicles at auction at a higher rate.”
You could say black is white or wet is dry when considering the current state of the wholesale market, since rental car companies now are part of the primary group of buyers at the auction rather than being typical consignors.
Along with releasing a new white paper on Tuesday, Black Book also looked to summarize this zany place called the wholesale market, where values now have climbed for 10 weeks in a row “during a time that traditionally experiences large week-over-week declines.”
Analysts tried to make sense of their newest data for the week that closed on Saturday in its latest installment of Market Insights. Overall, wholesale prices moved another 0.65% higher; almost the exact opposite of the average decline of 0.67% seen during the same week in 2017 through 2019.
“Limited inventory continues to be the driver of the market strength, particularly on vehicles that are desired by rental companies,” Black Book said in the report.
“The larger independent dealers are no longer the ones fueling the price increases, but instead it is the rental companies that need used vehicles to supplement their inability to get new inventory for their fleets,” analysts added.
Perhaps reinforcing the precarious spot occupied by rental car companies, Black Book said that on a volume-weighted basis, overall car segment values increased 0.83%. That up from the rise of 0.67% seen during the previous week.
Analysts indicated all nine car segments generated price gains again last week, led by compact cars (up 1.45%), which now have increased for the 12 consecutive weeks for an average weekly rise of 0.75%.
In fact, Black Book said compact car values have jumped by more than 1% during three of the past five weeks.
While not quite as much as the week prior, analysts added that prices for midsize cars rose another 0.95%. The streak of 12 consecutive weeks of upticks also includes a jump of 1.08% two weeks ago.
Switching to trucks, the overall, volume-weighted rise came in at 0.56%, according to Black Book, which also said all 13 segments moved higher. That’s not quite as much as a week earlier when the increase was 0.66%.
However, and perhaps reflecting more of that impact of rental car company buying demand, three truck segments posted value gains exceeding 1%. They included compact crossovers (up 1.03%), subcompact luxury crossovers (up 1.10%) and compact luxury crossovers (up 1.15%).
Finally, analysts said prices for full-size vans rose another 1.02%, as values for these commercial workhorses have now increased during 40 of the past 41 weeks.
5 highlights of latest white paper
With so much happening this year, Black Book released its latest white paper titled, The Automotive Industry Crystal Ball: Retail Market Insights.
In another news release, Black Book said the report insights include:
• How dealers, OEMs, and finance companies can use these insights to gauge brand health, consumer sentiment, pricing and more
• A look into inventory levels, including how new vehicle active listings are down 67% year-over-year, with cars down 74% and trucks down 57%
• What percentages of used vehicles of a brand is at a competitor’s used dealership
• Which state is a popular market for used electric vehicles, but the days to turn is high compared to the rest of the country, indicating an oversaturation of vehicles
• How remarketing teams can use the days’ supply and days to turn metrics as indicators for how wholesale market pricing is expected to move, which is essential knowledge in floor setting
“The automotive market has become extremely competitive, so finding new ways to gain an edge to push business to the next level is critical,” Black Book said. “Retail data is a powerful tool that can help improve your success in the market.
“Whether you are a dealer (franchised or independent), an OEM, or a lending institution, retail data can help you make better informed decisions that improve your business’s success,” Black Book continued. “Retail data provides a crystal ball into where the market is heading by looking at key metrics that give insight into brand health, consumer preferences, pricing and more.”
The latest white paper can be downloaded by going to this website.
Turns out, there was more than one decades-long drought snapped for an Atlanta entity this past week.
Cox Automotive, headquartered in Georgia’s capital, said Friday that its Manheim Used Vehicle Value Index saw its first-ever non-seasonally adjusted October increase last month.
The index — which began in 1997, a year after the city’s Summer Olympics and two years after its previous World Series championship — came in at 223.7 last month, a 38.1% year-over-year increase and a record high.
Wholesale prices were up 9.2% from September on a mix-, mileage- and seasonally adjusted basis, Cox Automotive said.
“Some of the monthly increase is a result of the seasonal adjustment, as October typically sees above-average vehicle depreciation and therefore used price declines,” the company said in a report. “This October was the first October in the history of the Manheim Index data, which dates to 1997, to see a non-seasonally adjusted price increase in October. The non-adjusted price increase in October was 5.4%.”
Like a baseball prognosticator at the All-Star break, October’s results took the Cox Automotive analysts by surprise.
In additional context shared via email, Cox Automotive chief economist Jonathan Smoke said: “The October results were surprising compared to our expectations in September. We had expected gains, but demand was much stronger throughout the month.
“October is normally a month that we see some of the least aggressive buying at wholesale by dealers because the used retail market is typically the slowest in the last months of the year,” Smoke said.
“The strongest months are always during tax refund season, so late fall usually represents the lull in the market before dealers begin to stock up for spring. Usually, the new market gets all of the retail attention in the fall because of new models being rolled out and old models being discounted,” he said. “That’s not the case this year as the production and supply chain problems have led to record low inventories and positioned the used market to be even stronger.”
Like the Braves regrouping at the deadline, car dealers may have to focus on trades.
It probably should not be a surprise that the Black Book Used Vehicle Retention Index for October hit a new record since analysts said earlier this week that wholesale prices have risen for nine weeks in a row.
Read more
Autumn 2021 is proving to be completely atypical, with wholesale values rising for the ninth week in a row, as Black Book pointed out on Tuesday.
But obviously, dealerships still need used vehicles to retail, so along with the latest pricing information, Black Book also touched on where used-car managers might be able to find the vehicles they need.
Read more
This month marked the first time in 22 years that the Atlanta Braves have reached baseball’s World Series.
But the historical milestone the used-car industry is likely to reach in October goes back even further.
“The used-vehicle market continues to buck historic seasonal trends and exhibit great strength as the industry moves deeper into the fall selling months,” Jonathan Banks, J.D. Power’s vice president of valuation services, said in an analysis. “Wholesale prices are expected to close out October up by more than 4%, on average, and this will mark the first-time used prices have increased for the period in the last 25-plus years.”
Part of what’s driving used-car prices over the wall is that the pre-owned vehicles are having to pinch-hit for a depleted supply of new vehicles.
And it’s not likely the market will soon find relief.
“The importance of used vehicles continues to progress as both dealers and consumers alike turn to pre-owned to help fill in the gaps created by current new-vehicle production and distribution constraints,” Banks said.
“Moving into November, expect used prices to remain near all-time highs as competition in the wholesale marketplace remains fierce due to lower levels of available units flowing through auction lanes and industry challenges remain in place.”
The astronomical used-car prices this year don’t necessarily mean the market is in the trash can, but 2021 may call for an asterisk in the record books.
And on the retail sales side, TrueCar is calling for 3.5 million used-car sales for October, which would beat year-ago figures by 5%, though they would trail September by 2%.
Loan terms on used vehicles averaged 70 months in October, with interest rates averaging 7.3%, TrueCar said.
KAR Global chief economist Tom Kontos elaborated a bit in his newest Kontos Kommentary about a primary way franchised dealerships have been able to satisfy their customers who wanted a new model that simply wasn’t available.
Read more
Halloween is less than two weeks away, and dealers might be thinking they’re getting tricked since it doesn’t appear to be much of a treat for them in the lanes this fall.
Black Book described the unusual pricing landscape that’s continues to be seen in the wholesale market, as overall values rose for the seventh week in a row with all vehicle segments moving higher.
Read more
J.D. Power Valuation Services — the presenting sponsor of Pre-Owned Con at Used Car Week — offered its latest assessments of wholesale prices and volume through its latest installment of Guidelines.
For consignors with vehicles to send to auction, the trends continue to be favorable. For dealers needing inventory to keep their blacktops from looking too bare, the conditions continue to remain challenging.
Read more
Your family might be all about pumpkin spice to give your home that fall feel, but the wholesale landscape currently conveys a springtime vibe.
Read more
