Dealers in upbeat moods thanks to more showroom activity translated into actions in the lanes being more robust last week, according to the latest Black Book Market Insights report.
Those behaviors resulted in analysts noticing wholesale values staying stronger than they had during the previous four weeks.
“Strong valuation trends were seen across the majority of vehicle segments last week. Good bidding combined with reduced inventory in the auctions resulted in strong sales percentages,” Black Book executive vice president of operations Anil Goyal said in the latest report.
Volume-weighted, Black Book reported that overall car segment values decreased by 0.16% last week. In comparison, car values declined by 0.45% on average during the prior 4-week period.
Among cars, analysts mentioned values of sub-compact cars decreased the most, sliding by 0.51% or $31.
Again according to volume-weighted information, Black Book determined overall truck segment values (including pickups, SUVs, and vans) edged just 0.06% lower last week. The previous four-week average decline in the truck space was 0.20%.
One of other truck note, analysts pointed out values of sub-compact luxury crossover/SUVs softened the most, dropping by 0.66% or $107.
As noted, dealers who went to a physical sale or participated online displayed a positive outlook, based on the reports from Black Book representatives who mingled in the lanes. Here is the rundown:
— From Massachusetts: “Retail has picked up here and that includes both new and used. Every seller at the auction today was pleased with the money received for their vehicles.”
— From Georgia: “Volume was down but a really strong sales percentage more than made up for the reduced inventory. It had the feel of a spring-like sale.”
— From Michigan: “Bidding was good today as retail activity remains fairly good in our market. One very positive sign is that dealers are no longer talking about credit availability as an issue.”
— From Florida: “The dealers were more positive and reported that the dealership phones are ringing.”
Cox Automotive explained why its July wholesale price data makes for a challenging comparison to what analysts reported a year ago.
In its latest update, the company said wholesale used-vehicle prices (on a mix-, mileage- and seasonally adjusted basis) increased 0.01% month-over-month in July. This movement brought the Manheim Used Vehicle Value Index to 140.5, representing a 2.6% increase compared to last July.
“After seeing steady to slightly higher prices in June in weekly Manheim Market Report (MMR) prices, July prices were firm,” Cox Automotive said in its report detailing the latest index reading.
“Three-year-old vehicle values in aggregate were flat for the month, which is much stronger than a typical July when prices normally decline by about 1%,” analysts continued.
“As a result of the stable month, prices in aggregate remain slightly lower than the beginning of the year, but non-luxury prices remain higher,” they went on to say. “Last July saw price appreciation, so even with stable prices, the comparison to last year is particularly tough.”
Of the six major vehicle segments analysts track for their monthly update, two generated slightly higher price increases than the overall reading. That pair included pickups (up 3.0%) and vans (up 2.7%).
Not far off the overall price pace were the latest readings for midsize cars (up 2.2%) and luxury cars (up 2.5%). SUVs and CUVs also rose, too, climbing by 1.2%.
Compact cars were the only segment to register a downward move, but Cox Automotive pinpointed it at just 0.3%.
“On a year-over-year basis, most major market segments saw weak seasonally adjusted price gains in July. Vans and pickups outperformed the overall market, while most other major segments underperformed the overall market,” analysts said.
“Last year is a tough comparison for both prices and sales as we experienced an abnormal increase in consumer demand during the summer driven by tariff fears and rising interest rates,” they reiterated.
Cox Automotive also shared its perspective on what rental-risk pricing did in July.
Analysts reported the average price for rental risk units sold at auction in July ticked up 3% year-over-year and 1% on a sequential basis.
The report added average mileage for rental risk units in July jumped 9% compared to a year ago and up 5% month-over-month to land at 49,000 miles.
With this past week marking roughly about a third of summertime unofficially remaining, the juncture also represented a span when values for both cars and trucks softened at greater rates than earlier in the season, according to the newest Black Book Market Insights report.
Based on volume-weighted information, analysts discovered overall car segment values decreased by 0.41% last week. In comparison, car values had decreased by 0.29% on average during the prior four-week period.
Among cars, Black Book found values of prestige luxury cars declined the most, dropping by 0.70% or $324.
Again according to volume-weighted data, analysts determined overall truck segment values (including pickups, SUVs and vans) dropped by 0.38% last week. That’s more than double the four-week average, which was 0.16%.
In the truck space, Black Book mentioned minivan values were off the most, sliding by 0.76% or $113.
“The used-vehicle market is showing normal depreciation pattern so far in the summer. In comparison, the market was stronger last summer,” Black Book executive vice president of operations Anil Goyal said in the latest report.
The report also contained anecdotes from the lanes as Black Book attends nearly 60 sales nationwide each week. One recap came from the largest annual event hosted by an auction in Washington.
“The market was hot for our big two-day event sale this year as 4,750 vehicles were offered up and 3,400 sold resulting in a 72% conversion rate. The average price of the vehicles sold was $19,980, which was encouraging,” the owner told Black Book.
Other lane watchers had these observations to share:
— From Michigan: “Some trucks are still pulling strong money, but overall our market is weakening due to sporadic retail sales.”
— From Florida: “Rentals and off-lease vehicles sold at a high percentage, but the inventory was low. The older vehicles seemed to attract more attention this week compared to the previous few weeks.”
— From California: “The sale was just OK here as it featured lots of high mileage units with 100,000 or more.”
At the highest level, Black Book’s Used Vehicle Retention Index remained steady in July compared to June, as analysts pegged the latest reading at 115.
However, looking deeper into the data, Black Book uncovered some notable value movements, mentioning four vehicle segments in particular.
Analysts noticed values of compact crossovers (up 0.82%) and sporty cars (up 0.48%) performed well, while full-size luxury SUVs (down 0.88%) and luxury cars (down 0.46%) endured higher losses.
“While the July Index is flat to the previous month, the segment breakdown shows very clear trends within segments,” Black Book executive vice president of operations Anil Goyal said in a news release. “Non-luxury crossovers enjoyed the largest gains, while luxury cars and luxury SUVs had the largest losses.”
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.
Along with three notable anecdotes from the lanes and prices steadying a bit compared to earlier this month, this week’s Black Book Market Insights report contained a development that editors haven’t seen in 14 years.
While the overall used-vehicle market has remained stable during the past three years, Black Book noticed wholesale values in the luxury car segment have continued to slip as measured by its retention index.
Editors determined the gap between the luxury car reading and the overall used-vehicle market index is now the largest it’s been since 2005.
Last week’s metrics reinforced the point as Black Book said values of prestige luxury cars declined the most, sliding by 0.42% or $137.
The latest report went on to mention that based on volume-weighted data, overall car segment values decreased by 0.23% last week. That drop is less than half of the four-week average, which editors pinpointed at 0.48%.
Meanwhile, volume-weighted information on the truck side showed overall values (including pickups, SUVs and vans) ticked down by 0.14% a week ago. That’s 7 basis points less than the four-week average decline of 0.21%
Among trucks, Black Book said values of subcompact crossovers fell the most, dropping by 0.70% or $80.
“The used-vehicle values were stable last week after stronger declines in the previous two weeks. In particular, pickup trucks are showing strong retention,” Black Book executive vice president of operations Anil Goyal said in the latest report.
Finally, editors closed with a trio of observations from their representatives stationed at nearly 60 sales nationwide.
The recaps begin with a buyer in Georgia telling Black Book: “I could get the vehicles I was looking to buy cheaper from the factory than what some of the late models were bringing today.”
At a sale in Wisconsin, Black Book’s lane watcher said, “Dealers remain upbeat as we had active bidding and selling. SUV’s and pickup trucks ruled the day.”
Finally, from Florida, Black Book shared, “The rental and lease lanes sold fewer vehicles, mostly due to their condition. The representatives seemed to have little desire to lower floors at this point.”
Spring officially ends in June, and KAR Auction Services chief economist Tom Kontos explained the wholesale market wrapped up its spring season “appropriately” during the same month.
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, Kontos reported that wholesale used-vehicle prices in June averaged $11,478 — down 1.6% compared to May but up 5.4% relative to June of last year.
As part of his latest Kontos Kommentary, the KAR expert pointed out that prices for cars and SUV/crossovers dropped most, while van and pickup truck prices held up better.
The 2019 spring/tax season used vehicle market came to an end appropriately in June as average wholesale prices fell on a month-over-month basis, although they were up year-over-year,” Kontos said.
“Solid retail used-vehicle sales again provided demand-side support for wholesale values,” he added.
Also fueling the year-over-year price gain was late-model midsize cars and midsize SUV/CUVs. As he does regularly, Kontos closely examined these vehicles, holding constant for sale type, model-year age, mileage and model class segment, using criteria that often characterizes off-lease units. These vehicles are 3 years old or less and have less than 45,000 miles.
Prices for these particular midsize cars climbed 5.7% or $679 to $12,600, while prices for these specific SUV/CUVs rose 2.6% or $529 to $20,564.
Kontos went on to mention average wholesale prices for used vehicles remarketed by manufacturers in June jumped 4.6% month-over-month and 6.8% year-over-year.
He noted June prices for fleet/lease consignors declined 2.0% sequentially but rose 4.3% annually.
Finally, Kontos pointed out average prices in June for dealer consignors increased 1.6% versus May and 7.3% year-over-year.
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
June 2019 |
May 2019 |
June 2018 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$11,478 |
$11,667 |
$10,895 |
-1.5% |
5.4% |
| |
|
|
|
|
|
| Total Cars |
$8,688 |
$8,945 |
$8,548 |
-2.9% |
1.6% |
| Compact Car |
$6,550 |
$6,800 |
$6,441 |
-3.7% |
1.7% |
| Midsize Car |
$7,474 |
$7,690 |
$7,533 |
-2.8% |
-0.8% |
| Full-size Car |
$7,921 |
$8,142 |
$7,495 |
-2.7% |
5.7% |
| Luxury Car |
$13,456 |
$13,863 |
$13,172 |
-2.9% |
2.2% |
| Sporty Car |
$14,981 |
$14,946 |
$14,515 |
0.2% |
3.2% |
| |
|
|
|
|
|
| Total Trucks |
$13,637 |
$13,828 |
$12,901 |
-1.4% |
5.7% |
| Minivan |
$8,626 |
$8,581 |
$8,652 |
0.5% |
-0.3% |
| Full-size Van |
$13,100 |
$12,988 |
$13,202 |
0.9% |
-0.8% |
| Compact SUV/CUV |
$11,224 |
$11,393 |
$10,829 |
-1.5% |
3.7% |
| Midsize SUV/CUV |
$11,855 |
$12,199 |
$11,135 |
-2.8% |
6.5% |
| Full-size SUV/CUV |
$14,736 |
$15,482 |
$13,499 |
-4.8% |
9.2% |
| Luxury SUV/CUV |
$19,081 |
$19,381 |
$18,331 |
-1.5% |
4.1% |
| Compact Pickup |
$11,017 |
$11,023 |
$9,471 |
-0.1% |
16.3% |
| Full-size Pickup |
$17,243 |
$17,172 |
$16,386 |
0.4% |
5.2% |
Source: ADESA Analytical Services.
While J.D. Power Valuation Services saw wholesale prices edge lower in June, analysts are holding on to their projection that used-vehicle prices will tick up on a year-over-year basis by the time 2019 closes.
In its latest installment of Guidelines, analysts repeated that they expect prices for vehicles up to 8 years in age to increase by approximately 0.2% to 0.7%.
“From where prices are currently through the remainder of the year, we are expecting a mild decline, which barring any serious economic changes or a dramatic shift in new-vehicle incentive strategies should hold true,” J.D. Power Valuation Services said in the report.
At the segment level, the report indicated mainstream passenger car prices are expected to be the strongest through the remainder of 2019. For example, J.D. Power Valuation Services stated that compact and midsize car prices are expected to increase by around 4.5% and 3.5% year-over-year.
“This will be driven by lower supply, especially now with manufacturers discontinuing or cutting back new-vehicle production on these models coupled with continued demand for cost-conscious consumers,” analysts said.
J.D. Power Valuation Services predicted mainstream SUV prices are also expected to remain positive with compact SUV prices projected to increase by around 0.5% while midsize SUV prices should climb by about 1.5%.
“SUV prices will continue to be suppressed by increasing levels of supply coming back to the market,” analysts said.
Bolstered by increasing levels of used supply, J.D. Power Valuation Services shared that all premium segments are expected to experience declines in 2019 ranging between 3.5% for compact premium SUV to 5.5% for midsize premium cars.
“As new-vehicle prices rise and affordability concerns increase, consumers will continue turning to used vehicles as alternatives to their new counterparts,” analysts said.
“Even with increasing levels of used supply, healthy consumer appetite for used vehicles will help keep used values relatively strong,” they added.
Data at 2019 midpoint
J.D. Power Valuation Services insisted that the used-vehicle market generated a strong performance during the first half of 2019.
Through June, analysts determined used-vehicle prices are on average 2.1% higher than during the same six-month a year ago.
“Prices this year were initially expected to contract slightly due to increases in used supply, interest rates, tighter credit conditions and pressure from new-vehicle incentives due to a slowdown in retail sales,” analysts explained in Guidelines.
“Several of these variables have surprised the industry with interest rates and incentive spending remaining relatively flat,” they continued. “These factors coupled with a continuation of used-vehicle demand will ultimately result in used price performance that will end up slightly outperforming 2018.
In terms of June’s performance, the used-vehicle market cooled as J.D. Power Valuation Services found that wholesale prices declined by 0.8%. However, the month’s performance was better than historic June figures.
As a result, the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index increased by 1.3 points relative to May to 122.0.
Guidelines offered more insight by comparing the first half of this year versus the same stretch last year.
“Mainstream passenger car price increases have outpaced their SUV counterparts. More affordable small, compact and midsize car segment prices have increased the most, while mainstream SUV segment prices have also increased, however not nearly to the same degree as passenger cars,” said analysts, who pointed out that the supply of SUVs less than 5 years old influenced the readings.
“As for the luxury side of the market, premium segment prices are down across the board and are also feeling the pressure of elevated levels of wholesale volume returning to the market,” analysts added.
While affordability appears to be pushing potential vehicle buyers to the used market, recent lane activity and wholesale price trends chronicled by Black Book are reflecting that some dealers have yet to see that swell of possible purchasers.
The newest Black Book Market Insights report values for both cars and trucks softened last week at rates much higher than the four-week average. Black Book executive vice president of operations Anil Goyal offered his analysis.
“Vehicle values registered an increased drop last week, particularly for car segments. Slow retail sales are reflecting in lower bids at the auctions,” Goyal said in the latest report.
Based on volume-weighted data, editors discovered overall car segment values decreased by 0.77% last week. That’s slightly more than double the four-week average drop that Black Book calculated to be 0.38%.
Among cars, Black Book mentioned values of midsize cars decreased the most, softening by 1.20% or $110.
Again looking at volume-weighted information, editors noticed overall truck segment values (including pickups, SUVs and vans) slid by 0.27% last week. In comparison, truck market values decreased by 0.15% on average during the prior four-week period.
Within trucks, Black Book said the values of full-size luxury crossover/SUVs decreased the most, declining by 0.89% or $286.
The anecdotes Black Book collected from its representatives stationed at nearly 60 sales nationwide reinforced the observation that retail activity isn’t picking up even though an array of experts are seeing consumers flock to the used market because of affordability.
Editors relayed these comments:
— From Georgia: “Older, higher-mileage vehicles continue to be strong and attracted a lot of attention. However, one remarketer commented that sales percentages and prices on his inventory have been down recently.”
— From Illinois: “The auctioneer said that the bidding was still good. Not much change in the last few weeks.”
— From Florida: “Dealers are reporting slow retail sales.”
— From Indiana: “The really nice front-line vehicles are still very difficult to find at the auctions.”
Black Book’s Used Vehicle Retention Index for June showed how the impact from the spring market still left its mark even as summer began.
Editors released the June index reading on Tuesday, noting that it ticked up 0.6% from the previous month to land at 115.0.
Black Book explained the strong spring season continued into the first month of summer with a majority of segments strengthening in June. Editors pointed out full-size vans (up 1.43%) and premium sports cars (up 1.25%) performed exceptionally well.
“The uptick in the seasonally-adjusted index shows that the strength of the used vehicle values is steady,” Black Book executive vice president of operations Anil Goyal said in a news release.
“The strength is broadly seen across all mainstream vehicle segments, while luxury brand segments registered a decline,” Goyal continued.
The Black Book Used Vehicle Retention Index is calculated using the firm’s published wholesale average value on 2- to 6-year-old used vehicles, as a 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 Used Vehicle Retention Index, go to this website.
While movements aren’t regaining spring-market strength, Black Book is seeing wholesale prices being supported by Fourth of July demand.
According to the latest Black Book Market Insights report, car depreciation decelerated while truck prices landed near the four-week average.
“Used-vehicle demand remains relatively strong as we approach the Fourth of July weekend. Truck values continue moderate stability, while car depreciation has decelerated,” Black Book executive vice president of operations Anil Goyal said in the latest report.
According to volume-weighted data, editors determined overall car segment values decreased by 0.21% last week. That’s a little more than half of the four-week average that Black Book pinpointed at 0.39%.
Among cars, editors found the values of prestige luxury and midsize cars decreased the most, sliding by 0.48% and 0.40%, respectively. All car segments except one — premium sporty cars — had smaller depreciation rates than the prior week.
Again based on volume-weighted information, Black Book discovered overall truck segment values (including pickups, SUVs, and vans) declined by 0.17% last week. The four-week average truck price decline was 0.13%.
Within trucks, the values of compact luxury crossover/SUVs and sub-compact luxury crossovers declined the most at 0.72% and 0.51%, respectively.
Turning next to what Black Book representatives noticed in the lanes at nearly 60 sales nationwide, the anecdotes covered an array of topics, including:
— From Pennsylvania: “While they are popular all of the time, the $10,000 price range units are in extremely high demand.”
— From Illinois: “I spoke with three different remarketers at the auction and they all agreed that the used-vehicle market remains good. However, they did state that the higher-price vehicles are becoming a challenge to remarket.”
— From Massachusetts: “The rental and lease lanes sold almost everything, but their reps reported that trucks have become a struggle to get the money they were a few months ago.”
— From Michigan: “Our market seems to be trending downward, especially at the upper end of the truck market where vehicles are priced around $60,000.”
