Though trucks had been defying depreciation trends seen in the car segments so far this spring, it looks like the pickups and SUVs joined their smaller counterparts last week.
According to Black Book’s latest Market Insights Report, last week the lanes showed broader declines for the majority of the car segments, and even many of the truck segments.
Overall, car values depreciation by 0.53 percent or $65 last week, while trucks saw prices fall by an average of 0.28 percent or $46.
And the only segment to see any increase in price last week were the prestige luxury cars, with a slight increase of 0.03 percent or $9.
Though once again, the smaller cars led the way for weekly depreciation, luxury SUVs and midsize pickups experience ramped up depreciation, as well.
Compact car, entry level car and entry midsize car segments dropped the most by 1.36 percent or $119, 0.90 percent or $64, and 1.05 percent or $100, respectively.
The biggest decline among the truck segments was seen in the luxury SUV segment, which saw prices fall by 0.71 percent or $206.
The midsize pickups also saw increasing price declines with a 0.60 percent or $73 drop.
The minivan cargo segment followed in terms of depreciation with a 0.84 percent or $51 decline.
“Broad declines starting to appear in the market led by smaller cars showing the most decrease in value with continued negative sentiments from the buyers,” said Anil Goyal, vice president of automotive valuation and analytics.
That said, car prices are definitely dropping at a much higher rate. According to Black Book data, car prices have dropped for eight straight weeks, for an average depreciation rate of 2.3 percent.
Comments in the lanes reflect price movement, as well. Black Book overheard a buyer from Washington state say, “Late model trucks are a little softer at this location today.”
While another auction attendee in Chicago stated, “The prices are down somewhat and I am able to buy cars I wouldn’t buy three months ago.”
While the auction value for the average vehicle segment declined 1 percent between May 1 and May 29, there were a few segments in Kelley Blue Book’s data set that bucked the trend, including three that actually showed an increase.
The latest Blue Book Market Report breaks down the top five and bottom five performing segments in May, based on Kelley Blue Book Auction Values on model-year 2012 through 2014 vehicles.
At No. 1 on the top performers list is the sporty compact car, whose auction prices went up 3.7 percent over the four weeks. Next were full-size pickup trucks, which climbed 1.4 percent.
“Despite the overall decline in segment values, the full-size pickup truck segment had a good month led by the Chevrolet Silverado, Ford F-150, Toyota Tundra and GMC Sierra, all gaining just more than 2 percent this month,” KBB said in its analysis.
The only other segment to show an increase was the sports car segment with a 0.1-percent hike.
Tied for fourth on the list were high performance cars and minivans/vans. Values in both of these segments were down 0.2 percent.
Conversely, electric vehicle values had the steepest drop during the period (3.6 percent), followed by subcompact cars (down 3.3 percent), compact cars (down 2.5 percent), midsize cars (down 2.4 percent) and luxury cars (down 2.2 percent).
KBB shared some additional perspective on the overall drop in used values this past month: “The downturn we are seeing in used-car values comes as no surprise for this time of year. Typically, used-car values rise throughout the first part of the year and begin to trend downwards throughout the remainder of the year.
“The average overall yearly decline for the last two years has been nearly 9 percent when comparing average vehicle values from January to December,” the company noted. “Additionally, Kelley Blue Book expects off-lease supply to negatively impact values further as they begin to return to the market later this year.”
Cox Automotive chief economist Tom Webb reviewed the Manheim Used Vehicle Value Index going back more than two decades to give dealers and finance companies context relating to the latest wholesale-price decline.
Webb indicated wholesale vehicle prices (on a mix-, mileage- and seasonally adjusted basis) dropped for the fourth consecutive month in May, bringing the index reading to 123.8. The level represented a dip of 0.7 percent from a year ago.
“A look at the Manheim Index over its entire 20-plus year history shows that pricing over the past five years has been not only elevated, but stable,” Webb said when the newest index report arrived on Friday.
“Sure, there have been intra-year swings; but over the longer time span, the movements have been modest,” he continued. “Indeed, even with the recent declines in wholesale pricing, the index is only 3.1 percent lower than the peak reached in May 2011 — and that was a peak that was artificially boosted by the supply disruption resulting from Japan’s earthquake.”
Webb also pointed out the current Manheim Index reading is also close to its historic trend line, “whether that line is based on raw data or adjusted for changes in new vehicle prices.”
He went on to discuss what movement might be coming next in light of ongoing changes in the wholesale market and activities inside and outside the lanes.
“With wholesale supplies certain to grow (indeed, accelerate), a movement below trend should be anticipated,” Webb said. “The degree of deviation will be dependent on the ability of basic economic forces — labor market and credit conditions — to continue to support retail used unit volumes and profits.”
Market Segment and Price Tier Trends
Webb explained that May represented a continuation of trend with respect to pricing movements within market classes.
“Namely, compact cars were weak, and pickups were strong,” Webb said. “Luxury cars also continued to underperform the overall market, and within that segment, entry luxury cars were under the greatest price pressure.”
Manheim reported that compact-car prices softened by 6.6 percent in May while pickup prices surged by 6.1 percent. Prices for those luxury units dipped by 1.8 percent, joining the downward price trend that also included midsize cars (down 0.9 percent) and SUVs and CUVs (down 0.7 percent).
The sixth segment Manheim tracks, vans, saw their prices edge up 1.6 percent in May.
“Within the pricing tiers, there was weakness in the $9,000 to $11,000 range and strength in everything above $15,000,” Webb said. “This also represented a trend that has been going on for some time. The volume of vehicles offered in the $9,000 to $11,000 range was up considerably from a year ago.
“Pricing for dealer-consigned units in May was higher than a year ago, and average mileage declined ever so slightly during the month after rising for many years,” he went on to say.
Rental-Risk Unit Analysis
Webb noted that “older, rougher” vehicles dragged down prices in this segment of the wholesale market.
Manheim tabulated that a straight average of auction prices for rental risk units sold in May dropped by more than 10 percent from the year-ago level. After adjusting for broad shifts in market class and mileage, analysts found that the year-over-year decline was still more than 6 percent.
“Much of the remaining decline was a result of older and rougher-condition vehicles being sold,” Webb said.
Webb elaborated his assessment by giving examples In May of last year, he pointed out that 65 percent of the rental risk units sold were from the 2013 model year. But this past month, Webb said only 29 percent of sales were accounted for by 2014 model year vehicles while 57 percent of sales continued to be accounted for by 2013 model-year units.
Likewise, in May of last year, Webb explained 45 percent of the risk units sold at auction had a condition grade of 4.0 or better. In May of this year, he said only 30 percent did.
“Auction volumes for rental risk units were up significantly in May and for the first five months of the year,” Webb said. “Meanwhile, the number of new units sold into rental rose less than 1 percent in May, but was up 9.4 percent year-to-date.”
Consumer Spending on Vehicles
In his usual, to-the-point manner, Webb said that consumers are buying vehicles, but not much else.
He recapped that new cars and light-duty trucks sold at a seasonally adjusted annual rate (SAAR) of 17.7 million in May.
“This was far above expectations, and it was the best pace in nearly a decade,” said Webb, who added that three calendar “quirks” boosted the sales rate. Those elements included:
— Five weekends during the month
— Memorial Day coming early
— The “quaint” notion of adjusting for one less “selling” day
“Expect a June pullback (the selling-day adjustment will go the other way,” Webb said. “Nevertheless, new vehicle sales are strong (the year-to-date pace is 16.8 million), especially given that consumer spending on other items has been weak all year as households increase their savings rate.”
While the new-model market might have a skewed numbers in Webb’s view, the Cox expert insisted the used-vehicle retail market remains “solid.”
Total used-vehicle retail sales rose 5 percent in April, after being down in the first quarter, according to National Automobile Dealers Association.
“Conversations with dealers suggest that the turnaround continued in May,” Webb said. “For certain, CPO sales continued their record pace, with sales up 12.2 percent in May and 11.6 percent year-to-date.
“With dealers’ increasing operating efficiencies, the higher throughput has produced record profits,” he continued.
Webb closed his latest industry analysis with one more point.
“With respect to supporting used-vehicle values, it is encouraging that new-vehicle transaction prices continue to rise, incentive spending is flat, and inventory levels are normal,” Webb said.
“Wholesale used-vehicle prices, as measured by the Manheim Index, are now approximately at their historical trend level with respect to new vehicle prices as measured by the government,” he concluded.
Despite a sequential price decline of more than 2 percent, ADESA noticed dealers still had to dip into their floor plan well on average of more than $10,000 per vehicle to fill inventory needs.
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, officials found that wholesale used vehicle prices in May averaged $10,440 — down 2.5 percent compared to April, but up 1.1 percent relative to May 2014.
ADESA indicated only full-size vans, mini SUVs and full-size SUVs had month-over-month increases in average prices.
“Average wholesale used-vehicle prices fell significantly in May relative to April, though they remained modestly higher than year-ago levels. Besides seasonal factors, supply growth put downward pressure on prices,” ADESA chief economist Tom Kontos said in his latest edition of Kontos Kommentary released on Friday.
“Used-vehicle retail sales were a mixed bag in May, as franchised dealers enjoyed an uptick in sales, especially of CPO units, while independent dealers saw year-over-year declines,” Kontos continued.
ADESA also determined average wholesale prices for used vehicles remarketed by manufacturers softened by 0.2 percent month-over-month and by 6.5 percent year-over-year. Analysts pointed out prices for fleet/lease consignors dropped by 3.0 percent sequentially and 3.0 percent annually.
Kontos mentioned dealer consignors in May saw a 2.6-percent price decrease versus April, but enjoyed a 1.8-percent increase relative to May of last year.
Finally, Kontos recapped that a new data series from the National Automobile Dealers Association showed a 3.6-percent year-over-year increase in used-vehicle sales by franchised dealers, but a 1.6-percent decrease for independent dealers.
He added certified pre-owned sales set new highs in May, growing 8.3 percent month-over-month and 12.2 percent year-over-year, according to figures from Autodata Corp. ADESA Analytical Services' data can be found below:
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
May 2015 |
April 2015 |
May 2015 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$10,440 |
$10,703 |
$10,328 |
–2.5% |
1.1% |
| |
|
|
|
|
|
| Total Cars |
$9,085 |
$9,376 |
$9,226 |
–3.1% |
-1.5% |
| Compact Car |
$7,213 |
$7,433 |
$7,267 |
-3.0% |
-0.7% |
| Midsize Car |
$8,024 |
$8,298 |
$8,504 |
-3.3% |
-5.6% |
| Full-size Car |
$7,183 |
$7,641 |
$7,200 |
-6.0% |
-0.2% |
| Luxury Car |
$12,923 |
$13,205 |
$12,668 |
-2.1% |
2.0% |
| Sporty Car |
$13,885 |
$14,084 |
$13,140 |
-1.4% |
5.7% |
| |
|
|
|
|
|
| Total Trucks |
$11,777 |
$11,915 |
$10,914 |
-1.2% |
7.9% |
| Minivan |
$7,630 |
$8,221 |
$7,311 |
-7.2% |
4.4% |
| Full-size Van |
$12,622 |
$12,471 |
$11,237 |
1.2% |
12.3% |
| Mini SUV |
$14,187 |
$14,130 |
$13,020 |
0.4% |
9.0% |
| Midsize SUV |
$8,575 |
$8,717 |
$8,387 |
-1.6% |
2.2% |
| Full-size SUV |
$12,017 |
$11,900 |
$10,901 |
1.0% |
10.2% |
| Luxury SUV |
$19,899 |
$19,947 |
$19,765 |
-0.3% |
0.6% |
| Compact Pickup |
$8,089 |
$8,107 |
$7,723 |
-0.2% |
4.7% |
| Full-size Pickup |
$14,556 |
$14,607 |
$13,343 |
-0.4% |
9.1% |
| |
|
|
|
|
|
| Total Crossovers |
$12,322 |
$12,700 |
$12,817 |
-2.9% |
-3.8% |
| Compact CUV |
$10,843 |
$11,255 |
$11,575 |
-3.7% |
-6.3% |
| Mid/Full-size CUV |
$13,447 |
$13,763 |
$14,095 |
-2.3% |
-4.6% |
The word on the streets in the specialty markets: expensive.
Prices for collectible cars continue to soar at a surprising pace, with zeroes being added to already expensive price tags right and left.
“Collectible cars continue to appreciate at an astounding pace, extending the pattern we have been seeing for the last few years,” said Eric Lawrence, director of specialty markets for Black Book. “Although vintage exotics still lead the way, later-model exotics and near-exotics are coming on strong.”
In the most recent Black Book Market Insights report, analysts shared that prices for collectible sports cars rose by 8.24 percent from April to June. Next up were exotic cars, which saw prices rise by 3.23 percent, followed by pony cars with a 1.30-percent spike.
From April to June, classic truck prices rose by 1.1 percent, muscle cars saw a 0.40-percent increase and American classic prices went up by 0.39 percent.
But these price increases aren’t holding buyers back. At a recent Mecum auction, the company sold 916 out of 1,404 vehicles for sale for a grand total of $42.9 million. The sale focused primarily on muscle cars.
Black Book also pointed out RM Sotheby’s most recent collectible car sale sold 34 out of 39 vehicles, for just under $30 million. Black Book analysts said this sale was defined by a wide selection of modern era supercars.
“Although you really couldn’t imagine two more dissimilar auction experiences, the success of both shows just how broad the appeal of collectible cars, both vintage and modern, continues to be,” the report stated.
And the sales featured an array of notable sales, based on impressive price tags.
For example, Mecum sold a 1967 Shelby Cobra for $1 million and a 1969 Ford Mustang Boss for $465,000.
Over at RM Sotheby’s, the company sold a 1963 Ferrari 250 GT Lusso for $2.2 million and let go of a 1985 Ferrari 288 GTO for just over $2 million, as well.
Though pickups have been strong when it comes to price retention most of the spring, another segment joined them this past week: the premium sporty cars.
According to the latest Black Book Market Insights report, premium sporty cars began picking up in price this past week at auction, a trend which is expected during the summer months.
The premium sporty cars saw prices rise by 0.20 percent or $76. The was the only increase among the car segments this past week. The average overall price movement for cars came in at a decline of 0.54 percent or $67.
With the tax season surge over, some of the smaller vehicle segments that normally perform well over the tax-time months, are now seeing prices correct themselves.
The entry-level cars led all car segments for depreciation this past week, with prices dropping by 1.3 percent, or $93.
Black Book pointed out entry mid-size (-0.87 percent or -$84) and full-size cars (-0.76 percent or -$81) have also started to show larger depreciation as we head into summer.
Black Book analysts also cited a trend that mid- and full-size car sales at auction are slowing, due in part to the fact many dealers are holding off on buying under the expectation prices for these segments will continue dropping over the summer months.
One buyer comment overheard by Black Book analysts in the lanes in Florida explained: “Not much play on mid-size and full-size cars today as buyers say that there are plenty to pick from.”
That said, KBB’s May Blue Book Market Report explained the downturn in used-car values “comes as no surprise” for this time of year.
“Typically, used-car values rise throughout the first part of the year and begin to trend downwards throughout the remainder of the year," KBB analysts explained.
Moving on to highlight the larger segments price movement last week, trucks finished the week with an overall price drop of $19, or 0.12 percent last week, according to Black Book data. That said, all pickup segments showed an increase in price.
“Mid-size and full-size cars continued to decline in value with further softness expected during summer months, while pickup truck prices held up high in most markets,” said Anil Goyal, Black Book's vice president of automotive valuation and bnalytics.
Full-size pickups saw the biggest dollar spike, with prices rising by 0.20 percent or $38, followed by the mid-size pickups with an increase of 0.25 percent or $30. Compact pickups also saw a slight increase, with rates rising by 0.13 percent or $19.
Comments in the lanes reflected truck strength, as one buyer from Boston said last week, “Trucks are still the hottest commodity around.”
And KBB’s report showed this trend proved true for most of May.
According to KBB data, wholesale prices fell by an average of 1 percent last month, after rising by 0.6 percent in April, but trucks once again bucked trends.
The full-size pickup segment performed well in May, led by the Chevrolet Silverado, Ford F-150, Toyota Tundra and GMC Sierra, all gaining just more than 2 percent this month, according to KBB data.
Black Book announced Wednesday it now has a mobile application designed for Spanish-language speakers.
Black Book Digital en Espanol, a mobile application for Spanish-speaking dealers, remarketers and other automotive professionals, is a Spanish-language version of the company’s mobile application that provides the latest vehicle valuation data.
Black Book cited the most recent Hispanic Business Automotive Report that highlighted the number of Hispanic auto buyers has grown over 16 percent year-over-year, totaling 677,799 as of June 2014. And growing with this buyer population is the group of automotive professionals servicing them.
“Black Book is thrilled to offer its mobile application to Hispanic dealers and remarketers in their native language so they can have access to critical valuation insight for more profitable business growth,” said Mike Williams, vice president of direct sales and mobile for Black Book. “With Black Book Digital en Espanol, Spanish-speaking industry professionals can access real-time pricing data and share it more seamlessly with their wholesale and retail customers for faster decision-making potential.”
Black Book Digital en Espanol — available on Apple iOS and Android mobile devices — offers the following features for Spanish-speaking industry professionals:
- Real-time valuation data without the need for Wi-Fi access
- VIN-scanner technology
- 360-degree valuation perspective with layers of vehicle insight
- Access to Carfax and AutoCheck reports
- Comprehensive Demand Index illustrating regional pricing trends
- Inventory management and information share capabilities
“In today’s world of car shopping, it’s important to have accurate vehicle value data with split-second access, especially in a language that’s familiar to my sales team and customers,” said Hector Rodriguez, president and owner of Bronco Motors. "We recognize the significant growth in our Hispanic car-shopper volume, and Black Book Digital en Espanol provides the timely, accurate insight needed to remain profitable.”
As summer nears, prices in the lanes tend to take a turn downward — a trend most dealers and wholesales are used to, and one that is rearing its head again this year as we approach June. And this rings especially true for the car segments at auction.
According to the latest Black Book Market Insights report, all car segments saw prices fall in the lanes last week for an average decline of 0.40 percent (or $49).
Though all car segments saw a bit of a drop, the compact cars and luxury-level cars stood out from the pack with the biggest slides, with prices falling by 0.83 percent and 0.67 percent, respectively.
The prestige luxury cars also dropped rather far last week with a decline of 0.38 percent ($120).
Once again, the truck models performed much better than the car segments, with pickups and full-size vans seeing the strongest price retention.
Overall, the truck segments only saw a 0.10-percent ($16) drop last week.
“As expected, values in car segments continued their downward trend. Pickups and full-size vans are in demand and held their values well,” said Anil Goyal, vice president of automotive valuation and analytics.
Compact pickups saw the biggest dollar increase in price last week, with rates rising by 0.49 percent or $73.
Full-size vans followed closely behind when it came to price retention. Full-size cargo vans saw a $60 or 0.41-percent bump in price, while the full-size passenger vans rose by 0.32 percent ($47).
Offering some insight into van segment trends, Black Book analysts said, “Newer ‘European-style’ vans appear to be gaining ground in retail. Meanwhile, standard boxy style vans continue to show increases in wholesale values before the supply starts to build up from the newer models.”
And as overall pre-owned supply expands and quality used inventory becomes easier to come by, Black Book analysts said comments from the auctions “tell us dealer inventories are at levels that make for a more discriminating buyer at auction.”
For example, a comment from a Nevada auction read, “Buyers are much more discriminating and sellers are starting to face the adjustment,” while dealers in Nashville, Tenn. said “that they have plenty of inventory on their lots as sales have slowed some from previous weeks.”
For dealers working with budget-conscious shoppers, car technology company Carlypso — which runs the used sales website carlypso.com — has a few suggestions for the best pre-owned deals this spring.
But the company didn’t look to the used dealership lots to find the best offers; analysts turned to the lanes instead.
Citing the wholesale markets as the best indicators behind which cars are “hot” with consumers, Carlypso undertook a study that examined transactions from over 333,526 wholesale vehicle transactions from December 1, 2014 to April 15, 2015.
In looking at which vehicles and segments took the biggest hits in auction price this spring, Carlypso pointed out luxury brands and electric vehicles were at the bottom of the barrel for tax season.
“The Nissan Leaf and other electric cars (including many other year trim combinations) fared vary poorly,” Carlypso analysts said. “Excess supply and diminishing demand caused a 10-percent price drop in just four months on late-model Nissan Leafs. Lease turn-ins make up the majority of volume.”
And though these price declines may be a sign of high supply and low demand for these segments, these units might end up being attractive options for used buyers looking for a deal.
For example, although wholesale prices for 2012 Nissan Leaf SL were up 2 percent from December to the end of March, they fell by 9.45 percent during the same period to finish at an average of $10,894.
And the 2012 BMW 528i dropped from an average of $29,587 to $26,939 over the course of tax season.
“BMW 3 and 5 series both fared poorly. With lots of off-lease inventory, the base model 528i and 328i suffered large residual losses,” Carlypso reported. “Owners might have suffered almost $2,600 drop in value over just four months on the BMW 528i.”
Carlypso also offered the following examples as deals for spring:
- The 2012 Lexus ES350 base model is going for an average of $21,447, down from $23,207 in December.
- The 2011 BMW 328i is going for $18,953 in the lanes, down from $20,170.
- The 2013 Nissan Rogue SV is selling for an average of $16,786, down from $17,672.
- Lastly, the 2013 Honda Civic LX is going for an average of $13,307 in the lanes, down 3.03 percent from December rates.
Carlypso analysts pointed out the ES350 and Civic both experienced accelerated depreciation this spring, even though they are traditionally stronger cars in the lanes when it comes to price retention.
For dealers with customers in the market for BMWs or other lightly used electric and luxury cars, it might be time to push a used purchase since BMW and Nissan most likely won’t be offering new incentive packages that will compete with used sales this spring.
Once again, auction prices for cars were on the way down last week. But pickup truck prices began picking up even more.
The latest Black Book Market Insights report said that all car segments Black Book tracks saw prices drop in the lanes last week, while each of the three pickup segments in the data set saw a slight increase.
Overall, car prices fell by an average of 0.37 percent (or $46), while truck rates dropped by 0.12 percent ($19).
And over the last four weeks, car values declined by 1.06 percent, while truck values increased by 0.16 percent, on avearge, according to Black Book data.
“Most segments declined in value last week, led by small car segments declining the most, while pickups continued to show strength in this post-spring market,” said Anil Goyal, vice president of automotive valuation and analytics.
Though the $90 drop in compact SUV values and the $84 decline in midsize SUV values contributed to the general decline for trucks, pickup segments bucked the trend.
Compact pickups saw prices spike by $9 (or 0.06 percent); full-size pickups were up $3 (0.01 percent); and midsize pickups saw an increase of $22 (0.18 percent).
For the car segments, the smaller car category once again showed the largest drop in prices — a common trend after tax season.
Entry-level cars, in particular, saw the largest rate drop in the lanes last week with a 0.73-percent drop ($53). Rates for this segment have been falling over the last four weeks.
Black Book also shared feedback from the lanes in its report, highlighting comments such as: “Dealers feel that the prices are fairly high”; and “Sellers trying to get the most money possible are causing lots of no sales”.
Black Book analysts stated, “These comments reflect a market that saw all car segments decline during the week, while all three pickup segments saw a slight increase.”
Prices have fallen off this month after tax season strength showed up in April.
The RVI Used Vehicle Price Index was up by 0.06 percent in April when compared to March rates, but was down 2.7 percent year-over-year, according to the latest RVI Market Update.
Interestingly, even though smaller cars normally get the bigger boosts in price in regards to tax season trends, RVI reported that larger vehicles saw the largest gains last month. For example, full-size SUVs increased by 2 percent, while compact cars had the weakest performance in April, sliding by 0.7 percent.
This trend has continued into May as the industry continues to see larger units go for more in the lanes while retention among the car segments is taking a hit.
