The newest installment of the Market Insights Report from Black Book indicated how December is turning into a joyous time so far for both consignors and dealers.
The latest wholesale price data and anecdotes from sale days showed that used-car managers are finding more affordable vehicles to fill their inventories while consignors are fetching satisfactory funds for the units they’re sending down the lanes.
According to volume-weighted data, editors found that overall car segment values decreased by 0.72 percent last week. In comparison, Black Book noticed market values had decreased by 0.57 percent on average during the previous four-week stretch.
Among car segments, editors pointed out the full-size car, midsize car, sub-compact car and sporty car experienced the biggest drops with declines ranging from $49 to $120.
Again, looking at volume-weighted information, Black Book found that overall truck segment values (including pickups, SUVs and vans) dropped by 0.64 percent last week. In comparison, truck values had softened by 0.49 percent on average during the prior four-week period.
In truck segments, editors said the minivan and small pickup segments performed the worst, sliding by $167 and $173, respectively.
“Mainstream used-sedan values declined the most last week since January of this year. After bucking the trend for most of the year, the depreciation rates are finally reverting to seasonal expectations,” Anil Goyal, executive vice president of operations for Black Book, said in the report.
Meanwhile, what Black Book observers gathered from sale days reflected an upbeat start to the closing month of the year. Here is the rundown:
— From Indiana: “Supply is still low. Trade-ins are down for dealers so they are buying at the auction in order to maintain inventory.”
— From Pennsylvania: “Dealers were prepared to buy and did just that, which resulted in a 70-percent sales percentage for the auction.”
— From California: “Fewer no-sales, which indicates more realistic floors are being considered and set by the sellers.”
— From Massachusetts: “The big consignors said that they were happy as the money ranged from good to very good.”
Update on the specialty market
As they do on a monthly basis, Black Book editors also shared their perspectives on what’s happening in the specialty markets. Here are their observations:
— Collectibles: As the industry delves deeper into the final month of 2018, Black Book noted that much of the talk is about the upcoming auctions in Scottsdale, Ariz., in January. Silver kicks things off on Jan. 10. Barrett-Jackson gets things started in earnest on Jan. 12, and Worldwide, Bonhams, Gooding, Russo and Steele and RM Sotheby’s begin their previews with their main events starting towards the end of that week and running through the weekend.
— Recreational: Black Book mentioned the average selling price of motorized units at auction last month dropped roughly 9 percent, “which sounds significant, but if you exclude September’s unexpected price spike, the drop is really only about 1.5 percent from two months ago, which would be expected going into colder weather.”
— Powersports: With the holiday season officially upon us, Black Book said the powersports market has entered its typical winter slowdown. “The changes in value this month are fairly moderate considering the time of year, with most segments only down 1 percent or so,” editors added.
— Heavy duty: Editors indicated more used trucks are needed to satisfy the growing demand for both long haul and regional delivery needs. Franchised dealers, independent dealers and other used-truck sales venues need to find more inventory to take care of their customer’s used truck needs,” Black Book said.
— Medium duty: Black Book added that demand is consistently increasing for units in these segments as scarcity in used supply continues to be an issue for some segments.
Black Book’s representative watching a sale in California as November closed shared this observation: “The most common complaint from the dealers was the continued high prices paid to secure inventory.”
Reinforcing that dealer claim is the fact that Black Book’s Used Vehicle Retention Index climbed for the seventh month in a row. The November reading came in at 116.5, marking an uptick of 0.2 percent.
The index has been on a steady march higher since Black Book placed its May reading at 112.0. Editors pointed out that the only time this year that the index has moved lower came back in March when the reading dropped to 112.0 from 113.3 registered in February.
Black Book also highlighted the segments with the highest month-over-month gains in the retention index included:
• Midsize luxury crossover/SUV: up 0.8 percent
• Subcompact car: up 0.6 percent
• Midsize car: up 0.5 percent
• Premium sporty car: up 0.5 percent
• Luxury car: up 0.4 percent
“Cars and sedans continue to outperform many truck segments in the index, as many used car models offer great value for shoppers looking for affordable alternatives to new cars that are offered at high sticker prices with increasing interest rates,” said Anil Goyal, executive vice president of operations at Black Book.
“December is always an interesting month as aggressive deals are offered to reach year-end sales goals, but by January we will again begin to prepare for the spring tax-selling season,” Goyal continued.
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. During 2008, the index dropped by 14.1 percent, while during 2016, the index fell by just 6.4 percent.
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.
Latest weekly movements
Black Book arrived at its latest index reading after analyzing the last week of auction activity conducted in November.
The most recent installment of Market Insights from Black Book showed that values are softening even if the index has yet to show it.
Editors indicated that their volume-weighted data showed overall car segment values dipped by 0.64 percent last week. That pace is slightly higher than what they witnessed during the previous four weeks as Black Book watched car values decrease by 0.56 percent on average.
Among cars, Black Book noticed the compact car segment experienced the biggest drop, sliding by 0.77 percent or $60.
Looking again at volume-weighted information, editors found that overall truck segment values (including pickups, SUVs and vans) dropped by 0.79 percent last week. That rate is almost double what Black Book recorded during the previous four weeks when truck values declined by 0.42 percent on average.
In the truck space, editors determined the full-size crossover/SUV segment sustained the most significant drop, falling by 1.19 percent or $261.
Beyond what a lane watcher stationed in California shared, Black Book observers passed along anecdotes that might reflect a similar scene at the sale you most frequent. The rundown included:
— From Florida: “We are having more no-sales, but the overall market remains fairly steady for late fall.”
— From Wisconsin: “Dealer attendance was good, as was the bidding and selling.”
— From Indiana: “The market is a little sluggish, but anything in clean condition continues to sell.”
KAR Auction Services chief economist Tom Kontos didn’t need an elaborate explanation to describe movements associated with the October wholesale price data he and his team assembled.
According to ADESA Analytical Services’ monthly analysis of wholesale used-vehicle prices by vehicle model class, wholesale prices in October averaged $11,059.
That’s 0.7 percent higher compared to September and 0.8 percent above last October’s reading.
“Strong retail sales supported used-vehicle values in October, as wholesale prices recovered from declines in September,” Kontos said.
Where price movements ended up being more pronounced came when Kontos and the KAR team checked 3-year-old vehicles with 36,000 to 45,000 miles. When holding constant for sale type, model-year age, mileage, and model class segment, prices were up more significantly on a year-over-year basis for both midsize cars and midsize SUV/CUVs.
Kontos indicated midsize car prices in that slice climbed 4.4 percent or $494 to $11,786. He added that midsize SUV/CUV price jumped 6.2 percent or $1,147 to $19,769.
The KAR expert continued his latest Kontos Kommentary by noting average wholesale prices for used vehicles remarketed by manufacturers rose 1.0 percent month-over-month and 1.1 percent year-over-year.
Meanwhile, Kontos pointed out that prices for fleet/lease consignors softened 2.0 percent sequentially but increased 6.1 percent year-over-year.
He also mentioned average prices for dealer consignors were down 2.4 percent versus September and 2.3 percent relative to October 2017.
Kontos closed his latest update by sharing sales information he received from the National Automobile Dealers Association.
Retail used-vehicle sales by franchised dealers increased 11.8 percent year-over-year in October and 10.6 percent for independent dealers.
Kontos added that October certified pre-owned sales ticked 0.9 percent lower from the prior month but climbed 6.4 percent year-over-year, according to figures from Autodata. On a year-to-date basis, he said CPO sales are up 2.2 percent versus last year.
ADESA Wholesale Used-Vehicle Price Trends
| |
Average |
Price |
($/Unit) |
Latest |
Month Versus |
| |
October 2018 |
September 2018 |
October 2017 |
Prior Month |
Prior Year |
| |
|
|
|
|
|
| Total All Vehicles |
$11,059 |
$10,981 |
$10,970 |
0.7% |
0.8% |
| |
|
|
|
|
|
| Total Cars |
$8,672 |
$8,617 |
$8,718 |
0.6% |
-0.5% |
| Compact Car |
$6,586 |
$6,533 |
$6,578 |
0.8% |
0.1% |
| Midsize Car |
$7,565 |
$7,491 |
$7,846 |
1.0% |
-3.6% |
| Full-size Car |
$7,874 |
$7,655 |
$7,109 |
2.9% |
10.8% |
| Luxury Car |
$13,311 |
$13,380 |
$13,680 |
-0.5% |
-2.7% |
| Sporty Car |
$14,315 |
$14,327 |
$13,922 |
-0.1% |
2.8% |
| |
|
|
|
|
|
| Total Trucks |
$13,079 |
$12,949 |
$13,081 |
1.0% |
0.0% |
| Minivan |
$8,660 |
$8,314 |
$8,775 |
4.2% |
-1.3% |
| Full-size Van |
$12,547 |
$13,365 |
$13,091 |
-6.1% |
-4.2% |
| Compact SUV/CUV |
$11,025 |
$10,781 |
$10,630 |
2.3% |
3.7% |
| Midsize SUV/CUV |
$11,551 |
$11,144 |
$11,272 |
3.7% |
2.5% |
| Full-size SUV/CUV |
$14,061 |
$13,941 |
$13,832 |
0.9% |
1.7% |
| Luxury SUV/CUV |
$18,218 |
$18,285 |
$19,059 |
-0.4% |
-4.4% |
| Compact Pickup |
$10,046 |
$9,981 |
$9,359 |
0.7% |
7.3% |
| Full-size Pickup |
$16,224 |
$16,317 |
$16,640 |
-0.6% |
-2.5% |
Source: ADESA Analytical Services.
Consumers might have been elbowing each other for bargains this past week, but it appears dealers were not behaving similarly as auctions held their sales around Thanksgiving.
As a result, Black Book’s newest Market Insights Report showed that prices for both cars and trucks didn’t soften as much last week as they had during the previous month.
“Used-vehicle values were stable with the abbreviated auction schedules last week, and most auto auctions experienced lower demand,” said Anil Goyal, executive vice president of operations, for Black Book as a part of the latest report.
Editors indicated that their volume-weighted data revealed overall car segment values decreased by 0.41 percent last week. In comparison, car values had decreased by 0.63 percent on average during the previous four-week period.
Among cars, Black Book noticed the full-size car segment experienced the biggest drop, sliding by 0.77 percent or $85.
Again volume-weighted, editors pointed out that overall truck segment values (including pickups, SUVs and vans) softened by 0.23 percent last week. That reading is less than half of what editors spotted during the prior four-week stretch when truck values had dropped by 0.48 percent on average
In the truck space, Black Book found that the minivan segment performed the worst, slipping by 0.50 percent or $40.
Turning next to what Black Book representatives gathered from sales nationwide, observers described how dealers might have been spending a little time with friends and family or back at their lots helping customers finalize deliveries if their shopping list included a vehicle.
Here’s the rundown:
— From Michigan: “Not a lot of demand today, and as a result the market was similar to the weather, which was not good.”
— From Massachusetts: “The consignment was good, but the weather affected the attendance. The money was better than last week but still lagging.”
— From Indiana: “Consignment and attendance were both down today. Retail has slowed but most dealers remain optimistic about the market.”
— From Georgia: “Despite the cold and rainy weather, the in-lane attendance was good, and the bidding matched. There was a hesitation among dealers to avoid buying to over stock.”
— From Wisconsin: “Dealer bidding was active on some lanes and non-existent on others. Hit or miss for sure.”
The used-car market is now hitting “normal depreciation patterns” that should amplify in 2019, according to a recent analysis from Black Book.
Used vehicles from model years 2013 through 2017 saw their average prices dip 1.9 percent in October, the biggest decrease since January, the company said.
There was a 2.4-percent decrease in car prices and a 1.6-percent drop for trucks.
This followed a static September, when eight segments either showed increases or remained steady.
But this past month showed declines across the board. The lowest level of decline was for the subcompact crossover (down 0.4 percent), while the highest depreciation was for sporty cars (3.3 percent).
“It appears as though we’ve settled into normal depreciation patterns for the remainder of the year. Our residual forecasts reflect depreciation increasing next year,” Black Book executive vice president of operations Anil Goyal said in a news release.
“Increasing interest rates, potentially higher incentives on new vehicles and rising used supply levels, particularly in the compact SUV segment will be key factors driving the trend in 2019,” he said.
As October wholesale-price shifts fell in line with movements witnessed during the past five years, J.D. Power Valuation Services is expecting November readings to edge slightly lower.
And with the end of the year in sight, analysts also touched on where wholesale prices could land by the time 2018 closes.
Included in the latest installment of Guidelines, J.D. Power Valuation Services projected that wholesale prices for vehicles up to 8 years in age should decline by about 0.5 percent in November.
Meanwhile, analysts are thinking wholesale prices should finish the year up 3 percent versus the close of 2017, stemming in part because of “the exceptionally strong performances observed over the summer months.”
Looking even further into the future, J.D. Power Valuation Services is forecasting that wholesale prices will drift lower again in 2019, softening by 1.2 percent when compared to the end of 2018.
Reviewing October data
Prior to sharing its forward-looking assessments, the latest issue of Guidelines delved into the J.D. Power Valuation Services’ Seasonally Adjusted Used Vehicle Price Index and other notes from the firm’s October data.
Analysts indicated wholesale prices for vehicles up to 8 years old slid 3.1 percent in October; a movement on par with what they’ve observed during that month in each of the past five years. That price change pushed the index reading 1 point lower relative to September as the level came in at 120.6.
While the index softened in October, J.D. Power Valuation Services noted that its index reading is 2.8 percent higher year-to-date compared to the metric registered at this point in 2017.
“As expected, there wasn’t any noticeable strengthening in wholesale prices for the October period due to hurricane replacement demand,” analysts said in Guidelines.
Drilling deeper into the October information, J.D. Power Valuation Services noticed price movements at the segment level landed consistent with historic results within both the mainstream and luxury markets.
“Over the past several months, passenger car segments have outperformed their truck and SUV counterparts,” analysts said.
“However, this trend reversed in October as midsize and large pickup truck prices were some of the firmest on the non-premium side of the market,” analysts added, while mentioning that prices for those units dipped by a combined average of 2.2 percent.
Among cars, J.D. Power Valuation Services indicated large cars were the only price outlier to sustain a price movement higher or lower than 0.3 percentage points in October. The report noted large cars declined by 3.6 percent.
On the premium side, analysts surmised that price decreases in October were “relatively mild across the board,” while luxury large car prices ticked up for the second month in a row.
“However, this is an extremely low volume segment so any material change of one model can really shift overall segment results,” analysts said.
“Premium utility segment prices were generally firmer than both their mainstream utility and luxury car counterparts,” they went on to say.
Two kinds of vehicles that might turn the quickest on your lots might have become a little more affordable at the sale you frequent.
The latest Market Insights Report from Black Book noted a pair of vehicle segments sustained the largest price drops of 2018.
Here’s how Anil Goyal, executive vice president operations for Black Book, explained the latest developments.
“Used-vehicle depreciation worsens as midsize cars and compact crossover/SUVs see the largest weekly drop this year,” Goyal said in the report.
Volume-weighted, editors found that overall car segment values decreased by 0.69 percent last week. In comparison, Black Book indicated market values had decreased by 0.56 percent on average during the prior four-week period.
And that previously mentioned midsize car segment experienced the biggest drop as Black Book pinpointed it at 1.05 percent or $91.
Again volume-weighted, editors reported that overall truck segment values — including pickups, SUVs and vans softened by 0.53 percent last week. In comparison, the market values had dipped by 0.45 percent on average during the previous four-week span.
Among trucks, Black Book noted the compact van segment performed the worst, sliding by 0.96 percent or $84. And prices for those compact crossover/SUVs dropped by 0.79 percent or $96.
Turning next to what Black Book noticed in the lanes at nearly 60 sales the company attends each week, anecdotes began with the recap of a conversation with an auction general manager from South Carolina.
“We have a small auction without a lot of the commercial accounts and our sales percentages have been consistently about 65 percent. Our inventory is very popular but especially so right now,” the GM told Black Book.
Black Book’s other observations stretched nationwide, including:
— From Arizona: “The sale could best be described as sluggish. Lower mileage older cars were the most popular vehicles.”
— From California: “We had a pretty decent sale but definitely more no-sales compared to previous weeks.”
— From Michigan: “The dealers knew what type of vehicle they were looking for and were only bidding on those. Not a lot of speculating going on.”
— From Georgia: “Attendance and inventory were pretty low. There was not a lot of enthusiasm amongst the dealers.”
Black Book might have seen the last uptick in wholesale prices for the year.
Black Book released its Used Vehicle Retention Index for October as editors pinpointed the latest reading at 116.3, which represented a 1.5-percent increase over the last 12 months (114.6) and a 0.2 percent uptick since September (116.0).
Editors explained October’s used-vehicle retention activity may have represented the last positive change of the 2018 campaign, as seasonal depreciation patterns began to take hold throughout the month. Black Book noticed that cars, especially, saw their run of positive changes begin to lose steam, with strong retention trends that persisted throughout much of the year.
While most truck segments performed slightly better than cars, editors determined trucks still saw depreciation accelerate during the month.
The segments with the highest month-over-month gains in the index included:
• Compact crossover/SUV: up 0.95 percent
• Subcompact car: up 0.88 percent
• Midsize luxury CUV/SUV: up 0.53 percent
While the segments losing the most included:
• Full-size luxury CUV/SUV: down 0.81 percent
• Premium sporty car: down 0.46 percent
• Small pickup: down 0.45 percent
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.
“This Index data can be especially valuable this time of year because it is designed to give automotive professionals and portfolio managers an analytical look into the trends driving segment performance across cars and trucks,” said Anil Goyal, executive vice president at operations.
“Particularly as we begin to close out the year, it’s important to leverage the index data and related residual forecasts as dealers and lenders begin to look at their inventory and portfolio makeup, and whether to increase or decrease in any particular segment, and what they want that to look like heading into 2019,” Goyal went on to say.
Black Book reiterated the index dates to January 2005 when editors published a benchmark index value of 100.0 for the market. During 2008, the index dropped by 14.1 percent while during 2016, the index fell by just 6.4 percent.
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.
All NADA Values Online subscribers now have another tool at their disposal.
On Friday, J.D. Power announced a new feature aimed at enriching its extensive used-vehicle database. The company highlighted that the VIN Based Option is a new feature that utilizes packaging, content and descriptive features specific to a vehicle’s entire 17-character VIN (vehicle identification number) to enhance and customize each vehicle valuation instead of the basic 11-character VIN.
Currently, J.D. Power explained that an 11-digit VIN only provides basic information such as make, model and engine, meaning there is limited understanding about the vehicle you are researching. Now, with the marriage of the data tied to the full VIN from J.D. Power’s transaction database, the VIN Based Option feature can provide what the company believes is a precise, uniquely adjusted vehicle valuation, down to specific features and options installed in that specific vehicle.
“This tool has really taken vehicle valuation to the next level and provides subscribers with extremely valuable information at any stage of the process when buying or selling a used vehicle,” said Jonathan Banks, vice president and general manager of vehicle valuations at J.D. Power.
“Our valuation customers can move from a general approach to vehicle valuations and move to a precise value for an exact vehicle. This type of precision removes the guesswork of evaluating whether specific features, packaging and options are built on the vehicle, and that provides game-changing transparency,” continued Banks, who is among the experts on tap to appear during Used Car Week 2018 that begins Nov. 12 in Scottsdale, Ariz.
The VIN Based Option is a comprehensive tool supported by EpiAnalytics’ proprietary software, which correlates relevant data to the VIN using artificial intelligence (AI).
In addition, EpiAnalytics delivers access to additional millions of vehicles beyond the millions included in the J.D. Power database from CarStory.
“Identifying specific vehicle options, packages and trim within the 17-digit VIN provides users the ability to precisely price and accurately compare vehicles,” said Jim Vecchio, president of EpiAnalytics.
“In working with the automotive industry’s most trusted source for over five years, we have perfected our solution to deliver a VIN-based ‘birth certificate’ for each vehicle,” Vecchio continued.
Chad Bockius, president and chief product officer of CarStory, added his perspective, too.
“Both J.D. Power and CarStory share a collective passion for data, analytics and intelligence,” Bockius said. “These traits are on full display in the NADA Values experience.
“Analyzing more than eight billion different data points using its own computer vision and machine learning do accurately describe a vehicle, this approach not only saves dealers time, it also leads to the most accurate valuations available on the market today,” Bockius went on to say.
Bockius recently participated in an episode of the Auto Remarketing Podcast to discuss how market data can help car dealers make decisions around inventory. The conversation is available below.
In some places, the coldest temperatures in months have been recorded recently. Some locations already are seeing snowflakes.
And wholesale prices are cooling too, according to Black Book.
Anil Goyal, executive vice president of operations for Black Book shared in the newest edition of Market Insights that, “Last week, used-car values experienced the highest depreciation since January this year — driven by rising no-sales noticed at several auto auctions.”
Volume-weighted, editors found that overall car segment values decreased by 0.69 percent last week. In comparison, Black Book pointed out that market values had decreased by only 0.36 percent on average during the previous four-week period.
Among cars, editors shared the compact car, midsize car and sporty car segments experienced the biggest drops as declines ranged from $72 to $128.
Over the truck side, Black Book’s volume-weighted data showed overall truck segment values (including pickups, SUVs and vans) softened by 0.48 percent last week. That rate is nearly double the average that editors noticed during the prior four-week stretch that produced a 0.26-percent average decline.
For trucks, Black Book pointed out the midsize crossover/SUV segment performed the worst, sliding by 0.74 percent or $115.
Turning next to what Black Book representatives witnessed when attending nearly 60 sales, that no-sale activity Goyal referenced surfaced in multiple locations.
First from Wisconsin, “Rising no-sales are putting pressure on the consignor to lower the floors.”
And then in Nevada, “A softer sale this week with more no-sales than we have had in two months.”
As well as in South Carolina, “The sale started off promising before moving to mostly no-sales. The $5,000 price range was popular today.”
Two other anecdotes described what else is happening in the lanes nowadays.
Out of the Northwest, Black Book’s representative in Washington mentioned, “The dealers still present a positive sentiment as we had a good run of vehicles with a good selection of nice units.”
And finally in the Midwest, an observer in Illinois offered, “A new-car dealer stated that he purchased more vehicles than normal to take advantage of the falling market.”
