With the IRS beginning to accept tax returns this week, no doubt dealers are eager to have potential vehicle buyers arrive at their stores with refunds in hand to make down payments.
And stemming from what Black Book is seeing in the lanes, dealers also are looking to acquire the inventory that will satisfy those possible buyers.
“The used market continues to recover with higher demand from buyers in the auction lanes,” Black Book executive vice president of operations Anil Goyal said in the latest installment of the company’s Market Insights report.
“Both inventory and sales percentages were reported to be rising,” Goyal added in the report.
Delving into the volume-weighted data, Black Book determined overall car segment values declined by just 0.13% last week. That’s less than half of what analysts computed as the four-week average drop of 0.29%.
Again perhaps reflecting preps for those tax-season buyers, Black Book reported values of sub-compact cars, midsize cars and full-size cars all increased.
According to its volume-weighted truck data, Black Book indicated overall truck segment values (including pickups, SUVs, and vans) values declined by 0.28% last week. While not as much as in the car arena, analysts did point out that drop came in below the four-week average decrease of 0.37%.
Among trucks, analysts also noted the values of sub-compact crossovers and small pickups increased, too.
Black Book closed its latest report with anecdotes from its nearly 60 representatives stationed at sales nationwide. Here is the rundown:
— From Georgia: “The auction was really good today as the attendance and consignment were more than we expected. The fleet/lease lanes were selling, but the dealer lanes had difficulty getting buyers to visit their lanes.”
— From Michigan: “Clean 4- to 5-year-old vehicles with good miles are drawing some attention, but the 2- to 3-year-old vehicles are the most in demand.”
— From California: “A strong sale with action on the floor and online.”
— From Tennessee: “Our market is moving in the positive direction with trucks leading the way.”
After reviewing its final data set of 2019, J.D. Power Valuation Services found that its Used Vehicle Price Index rose in December, ending a run of four consecutive months of declines.
According to the latest installment of Guidelines, J.D. Power Valuation Services reported that its December index reading increased by 1.2% on a month-over-month basis to come in at 120.6.
Analysts added the December reading also landed nearly flat when compared to December 2018.
J.D. Power Valuation Services calculated that overall wholesale used-vehicle prices ended the year up 1% relative to 2018.
“Used price strength in 2019 can be attributed to a few factors including higher new-vehicle prices, high levels of clean late-model off-lease units entering the market and increased dealer demand for used vehicles,” analysts said in Guidelines.
J.D. Power Valuation Services determined that wholesale prices on the mainstream side of the market reached as much as 2.4% in December, with midsize pickups sustaining that drop. Midsize vans were not far off that pace, sliding by 2.3%.
The only mainstream vehicle segment to eke out an increase in December was midsize cars, which edged up 0.4%
Meanwhile on the premium side, J.D. Power Valuation Services reported that segment losses reached as high as 4.6% in December, with large premium cars leading the pack (down 4.6%) and midsize premium cars dipping by 2.7%.
None of the six premium vehicle segments that analysts watch for Guidelines managed to rise in December.
Finally, J.D. Power Valuation Services wrapped up its latest report by noting wholesale volume finished 2019 with a 3.9% lift compared to 2018.
While it might be frigid again in places like the Midwest and Northeast, unexpected mild weather for a good portion of January prompted dealers to flock to the auction to get a jump on the spring market.
Black Book’s newest Market Insights report discussed the resulting price trends and scenes from the lanes.
“The used market is hot already in this unusually warm weather in January, so far,” Black Book executive vice president of operations Anil Goyal said.
“The buyers are eager to stock up, resulting in an early market recovery after steeper depreciation late last year,” Goyal added in the latest report.
According to its volume-weighted data, Black Book reported that overall car segment values remained flat last week. In comparison, car values softened an average of 0.46% during the previous four weeks.
Analysts noticed values of luxury cars declined by 0.78%, while values of mid-size cars jumped by 0.37%, perhaps reflecting dealers gathering inventory to retail when consumers receive income tax refunds.
Turning next to its volume-weighted truck information, Black Book found values in the overall truck segment (including pickups, SUVs and vans) softened by just 0.17% last week. That figure is just a fraction of the four-week average in the truck arena that analysts pegged at 0.50%.
Among trucks, Black Book determined values of subcompact luxury crossover/SUVs declined the most, dropping by 0.59%.
While some Black Book representatives watching sales might have to bring back their winter-weather gear, what they relayed back to headquarters last week reflected a warm atmosphere. Here is the rundown:
— From Ohio: “The supply was low this week, but for the most part the vehicles sold well. The rougher units did get hit harder than expected with issues such as open recalls, buybacks and lack of maintenance.”
— From Washington: “Dealers seemed to be upbeat about the market.”
— From Nevada: “Dealers said that their post-holiday retail traffic has been good.”
— From Michigan: “Consignment was below average this week, which was unfortunate as the attendance was well above average.”
You know those shoppers who flock to retailers soon after Christmas Day looking for deeply discounted merchandise? Well, it appears dealers are behaving similarly at the auction during the opening days of 2020.
Black Book recapped in its latest installment of Market Insights that stable prices are triggering more buying activity in the lanes.
“The values of used vehicles have been more stable in the new year after the steeper declines late last year,” Black Book executive vice president of operations Anil Goyal said in the report.
“Sales conversion rates are reported to be higher in the auctions as dealers take advantage of the lower prices before the spring buying kicks in,” Goyal continued.
Looking deeper into the latest data beginning with volume-weighted car information, analysts found that overall car segment values decreased by 0.44% last week. That’s a bit lower than what Black Book spotted on average during the previous four weeks at 0.58%.
Among cars, Black Book indicated values of compact cars and sporty cars declined the most, softening by 0.67% and 0.64%, respectively.
Turning next to trucks, analysts explained their volume-weighted showed overall truck segment values (including pickups, SUVs, and vans) declined by 0.56% last week. That nearly mirrored the four-week average that Black Book pegged at 0.57%.
Within trucks, Black Book determined values of compact vans, sub-compact luxury crossover/SUVs and compact luxury crossover/SUVs dropped the most, sliding by 1.50%, 1.05%, and 1.05%, respectively.
Finally, the anecdotes that Black Book representatives stationed at nearly 60 sales nationwide reflected what dealers are doing as 2020 gains momentum. Here is the rundown:
— From Georgia: “Sales rates were strong and prices stable to strong on most vehicles. The supply was fairly low with many lanes running out of vehicles early in the day.”
— From Michigan: “The dealer lane that I watched had a good mix of inexpensive to midrange priced vehicles, and their conversion percentages were higher than some of the top-selling commercial lanes, which usually sell at a very high percentage.”
— From Florida: “Overall, it appears as if the market has stabilized, and we also had more 2019s selling than we have before. The truck inventory was high today, which resulted in lower sold prices.”
A surge in retail activity to close 2019 created a lift in wholesale prices in December, according to the analyst team at Cox Automotive.
Those analysts noticed that wholesale used vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 1.54% month-over-month in December. That movement brought the Manheim Used Vehicle Value Index to 141.1, representing a 2.5% increase from a year earlier.
Following a normalizing trend in weekly Manheim Market Report (MMR) prices at the end of November, Cox Automotive reported this week that December saw stability, and even gains, in many segments. Analysts calculated that 3-year-old vehicle values in aggregate were up 0.1% for the month.
As a result of the stabilization at year-end, Cox Automotive determined overall wholesale prices finished 2019 at a “historically more normal” level of 90% relative to the value at the beginning of the year but well below the performance experienced in either of the last two years.
On a year-over-year basis, luxury models, SUV/CUVs and midsize cars saw seasonally adjusted wholesale price increases in December. Those midsize cars led the way with a jump of 4.8% while the luxury units as well as SUV/CUVs each rose by 1.8%, according to Cox Automotive’s data.
Meanwhile, analysts noticed that prices for pickups, compact cars and vans each finished 2019 below year-ago levels.
Vans dropped the most as Cox Automotive pegged the decline at 3.0%. Analysts added that compact cars softened by 1.2% while pickups edged lower by 0.4%.
Cox Automotive chief economist Jonathan Smoke dissected the data further and offered these assertions.
“Used-vehicle values ended the year with an increase, as the pace of retail used sales grew both month over month and year over year,” Smoke said. “The strong December pace contributed to a 2.6% increase for used retail sales in 2019 helping offset the weakness in new retail sales.
“Payment affordability challenges in new grew demand for used. New retail sales declined by 4% in 2019, but total new light vehicle sales still came in above 17 million — but just barely — according to our Kelley Blue Book team,” he continued.
“The key reason the new market managed to hit 17 million was another year of increased fleet sales,” Smoke went on to say.
And speaking of a place where fleets often are leveraged, Cox Automotive also touched on how rental-risk pricing behaved to finish 2019.
Analysts determined the average price for rental risk units sold at auction in December increased 3.5% year-over-year and 1.5% on a sequential comparison.
Cox Automotive noted the average mileage for rental risk units in December came in at 51,400 miles, representing a 6% jump compared to a year ago and 5% versus November.
It appears 2020 began with light activity in the lanes and wholesale prices adjusting in ways Black Book considers normal for the opening days of the year.
Black Book’s latest Market Insights report showed values for both cars and trucks softened at a much lower level than what analysts noticed during the previous four weeks.
“The depreciation rate normalized in the first week of the new year after several weeks of steep declines in Q4 of 2019,” Black Book executive vice president of operations Anil Goyal said in the newest report.
According to volume-weighted information, Black Book reported that overall car segment values decreased by 0.26% last week. In comparison, analysts determined car values declined an average of 0.78% during the previous four weeks.
Among cars, analysts indicated values in the near luxury car and prestige luxury car segments decreased the most, sliding by 0.56% and 0.63%, respectively.
Again based on volume-weighted data, Black Book determined overall truck segment values (including pickups, SUVs, and vans) dropped by 0.44% last week. Like in the car space, the truck drop-off was less than the four-week average, which analysts pegged at 0.76% over the recent four-week period.
Within trucks, Black Book mentioned mainstream crossover/SUV segments decreased the least with the subcompact segment ticking just 0.17% lower.
The anecdotes coming from Black Book’s representatives stationed at sales nationwide also were on the light side to begin 2020.
One lane watcher in Michigan said, “Sales percentage seemed low. There were very few people bidding in the lanes and online.”
And an observer in New Jersey added, “Midsize cars sold well, but SUVs had a tough time getting bids.”
Black Book picked out a pair of trends from its newest Used Vehicle Retention Index that might impact how you shape your dealership inventory during the opening stages of 2020.
Analysts on Monday released the December index reading, which came in at 113.3, representing a 0.7-point dip from November when it stood at 114.0.
Black Book executive vice president of operations Anil Goyal looked closer at the data and arrived at these assertions.
“After a stable market performance earlier in the year, Q4 of 2019 experienced a steep decline in used vehicle values,” Goyal said in a news release. “The year ended with a 2.6% year-over-year change in the index.
“Full-size vans and luxury sedans experienced the steepest drops as the Index dropped by about 2% in the month of December for these segments,” he continued. “On the other hand, the index for mainstream mid-size sedans improved a little, highlighting the demand for affordable vehicles.”
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.
The index dates to January 2005 when Black Book published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1% while during 2016, the index fell by just 6.4%.
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.
Evidently, dealers are not rushing to the lanes to acquire inventory like consumers are hurrying to retail stores and websites to purchase holiday gifts.
Multiple Black Book representatives stationed at sales noticed lighter buying activity even as analysts spotted wholesale prices falling at rapid paces. Black Book executive vice president of operations Anil Goyal elaborated about the conditions in the latest installment of the Market Insights report.
“Steeper decline of used-vehicle values continued into December,” Goyal said in the report. “Average weekly depreciation in the last eight weeks is over three times the average weekly depreciation seen year-to-date.”
Looking first at car segment, Black Book reported that its volume-weighted data showed that overall car segment values decreased by 1.04% last week. That figure topped the previous four-week average, which was 0.96%
Among cars, analysts said values of compact cars and sporty cars declined the most, sliding by 1.38% and 1.23%, respectively.
Meanwhile, in the truck world, Black Book determined via its volume-weighted data that overall truck segment value (including pickups, SUVs, and vans) decreased by 1.18% last week. That amount marked a significant jump from the four-week average drop of 0.84%.
Analysts indicated values of minivans dropped the most, softening by 1.65%.
Whether it was frigid outside or still somewhat pleasant, two of Black Book’s representatives mentioned soft dealer bidding during sales they witnessed.
First originating from Florida, “Attendance both in the lanes and online was lighter than usual. Prices were down across the board on passenger cars, trucks and SUVs.”
And then out of Michigan, “You would think that the dealers would now be aggressively purchasing vehicles after the recent sharp drop in values, but that is not the case.”
Black Book closed by sharing comments from an auction owner in Ohio, who might have summed up the entire situation.
“Trucks and SUVs are picking up steam as snow is falling. Our sales percentages typically drop slightly during this time period because we have some sellers and buyers sitting out in anticipation of the big tax push early next year,” the auction owner said.
“Our biggest competition for the next few months will be Mother Nature,” the owner added.
On Friday, Cox Automotive released the latest reading of the Manheim Used Vehicle Value Index, and analysts emphasized one point after finalizing their wholesale market data.
“Last year remains a tough comparison for prices as we came off a record in the Manheim Index because of abnormally strong consumer demand in the fall related to tariff fears and rising interest rates,” analysts said in their report that accompanied the November update.
Cox Automotive determined wholesale used vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) decreased 0.98% month-over-month in November. That movement brought to the index reading to 138.9, a 0.1% decrease from a year ago, and the second consecutive year-over-year decline for the Manheim measurement.
“The accelerating declining trend in weekly Manheim Market Report (MMR) prices that started in September peaked in October and started November still at an above average pace,” Cox Automotive said.
“However, by the last week in November, price declines normalized and even saw gains for a few segments,” analysts continued. “Three-year-old vehicle values in aggregate were down 1.6% for the month.
“As a result of the higher depreciation pattern from September through mid-November, prices in aggregate relative to the beginning of the year continue to be lower than either of the last two years,” Cox Automotive went on to say.
Looking at the data by vehicle segments, Cox Automotive noticed cars moving in opposite directions. While values for midsize cars rose 3.1% year-over-year in November, prices for compact cars softened 5.4% based on the same time comparison.
Analysts noticed prices for the luxury cars inched up 0.1% year-over-year in November while the other three segments they watch all dipped. SUV/CUVs edged 1.0%, following by pickups giving up 2.0% and vans dropping by 4.4%.
To round out its look at the wholesale market, Cox Automotive touched on rental-risk units.
Analysts determined the average price for rental risk units sold at auction in November rose 1.2% year-over-year. But rental risk prices softened 0.6% compared to October.
Cox Automotive added that average mileage for rental risk units in November (at 48,900 miles) climbed 4% compared to a year ago and 2% month-over-month.
Black Book executive vice president of operations Anil Goyal got straight to the point in the latest edition of the Market Insights report distributed on Tuesday.
Goyal said, “This November was the weakest month in two years as used-vehicle values reversed course and started to decline sharply after a strong start earlier in the year.”
Wholesale prices closed the month by dropping at greater rates than analysts saw on average during the previous four weeks.
Beginning with volume-weighted information for cars, Black Book indicated overall car segment values decreased by 0.91% last week. That’s a bit higher than the four-week average of 0.86%.
In the car segment, analysts noticed luxury car, near-luxury car, full-size car and sub-compact car segments values decreased the most, with declines ranging from 1.24% to 1.36%.
The volume-weighted truck information revealed that the overall truck segment values (including pickups, SUVs and vans) dropped by 0.88% last week. Like cars, that movement topped the four-week average, which was 0.79%.
Among trucks, analysts found sub-compact crossover and full-size crossover/SUV segments decreased the most, sliding by 1.50% and 1.57%, respectively.
The anecdotes Black Book representatives stationed at nearly 60 sales nationwide shared with analysts at headquarters supported the price movements. Here is the rundown from the latest report:
— From Pennsylvania: “Late models are having a tough go due to the increasing incentives on the leftover 2019 new vehicles.”
— From Colorado: “There was a good mix of cars, trucks and SUVs. Small and midsize SUVs sold well, but the prices were down. Full-size trucks and SUVs were down in value also.”
— From Tennessee: “Prices and sold percentages were down. The smaller SUVs drew the most interest.”
— From Florida: “Rentals and off-lease were just OK as it seemed as if the dealers were only buying to replace vehicles that they had retailed and not interested in speculating.”
