Dealers widening purchase sphere impacts May wholesale price trends

LAWRENCEVILLE, Ga. - 

Dealers expanding their wholesale search parameters to find the clean vehicles that fit their inventory needs impacted both the weekly and monthly wholesale price updates from Black Book.

Taking a look first at the monthly view, Black Book on Tuesday released its Used Vehicle Retention Index for May, describing a 0.8-percent increase during the month to push the latest reading to 112.9. That figure is up slightly from 112.0 in April.

Editors indicated the index has now ticked up 0.6 percent during the past 12 months.

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.

Reflecting the strong end to the spring selling season, Black Book pointed out the latest index update contained 15 total segments with positive or unchanged results. Generating the strongest gains were:

— Subcompact cars: up 1.7 percent
— Compact crossover/SUV: up 1.7 percent
— Full-size cars: up 1.2 percent
— Sporty cars: up 1.0 percent

Editors added the Index now has shown a monthly decline in just three of the past 10 months dating back to August.

“The used-vehicle market is clearly benefitting from strong employment and consumer confidence currently, with many segments of both cars and trucks, large and small, seeing valuation strength over the last several months,” said Anil Goyal, executive vice president of operations at Black Book.

“After spring season, we typically see a decline in values in May. However, this year the used market is fairly stable, resulting in an uptick in our seasonally adjusted Index,” Goyal continued.

The index dates back 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 2014 when it hit a peak of 128.1.

The entire index report can be downloaded here.

Editors share latest via Market Insights

Meanwhile, looking at wholesale movements on shorter time comparison, this week’s Black Book Market Insights report showed car depreciation again accelerating more than trucks, led by three different luxury car segments.

“Wholesale markets show steady depreciation in values while overall consignment levels were reportedly lower last week,” Goyal said.

Volume-weighted, editors calculated overall car segment values decreased by 0.21 percent last week. In comparison, the market values had decreased by 0.10 percent on average during the prior four-week period.

As mentioned within cars, the luxury segments experienced the biggest drops, including:

— Near-luxury cars: down 0.43 percent or $69
— Luxury cars: down 0.40 percent or $77
— Prestige luxury cars: down 0.31 percent or $110

Volume-weighted, editors determined overall truck segment values (including pickups, SUVs and vans) softened by 0.10 percent last week. In comparison, the market values had decreased by 0.04 percent on average during the previous four-week span.

Among trucks, Black Book the luxury crossover/SUV segments performed the worst, including:

— Compact luxury crossover/SUV: down 0.37 percent or $73
— Midsize luxury crossover/SUV: down 0.26 percent or $56
— Full-size luxury crossover/SUV: down 0.26 percent or $86

After recapping the price movements, Black Book turned next to the anecdotes collected by its representatives stationed at about 60 auctions each week. That’s how editors learned about how dealers are on the hunt.

From Tennessee: “Consignment is still running low which is allowing the prices to remain fairly stable. Really nice vehicles are scarce and high,” the lane observer said.

From Pennsylvania: “A dealer stated that he is having to expand his buying area to find enough good, clean vehicles,” another auction watcher added.

Scenes from the Southeast gave further background to what’s happening at sales nowadays.

“Consignment was down. I watched a couple of dealer lanes and it seemed as if they were still trying to fetch the spring price points which resulted in a lot of no-sales,” Black Book’s representative in Georgia said.

Another observer in Florida added, “The sellers are trying to hold their floors on trucks, while luxury cars and older cars didn’t sell well.”

Finally, from up in Michigan, the sale recap went this way: “Dealer consignment and bidding was down this week and prices were on the soft side. Sports cars are doing really well.”

Update on specialty markets

With it being the first week of the month, Black Book also distributed its latest look on how the specialty markets are changing. Here is the rundown:

— Collectibles: Black Book recapped that buyers of the limited production Ford GT coupe were required to keep their vehicle for two years before selling it. Editors mentioned Ford has filed a lawsuit against actor John Cena, and his dealer, for prematurely selling his GT.

— Recreational Vehicles: Black Book noted that RV values at auction were mixed last month, with motorized units “taking a big hit, while towables managed a small gain.” With the exception of February, editors noticed that motor homes have been dropping consistently since last October.

— Powersports: Editors indicated powersports values heading into summer are steady or up modestly for most segments.

— Heavy-duty: Black Book indicated “serious” buyers showed up as Memorial Day weekend approached, while the volume of trucks at the heavy-duty auction venues dropped, helping to stabilize prices.

— Medium-Duty: This past month, editors determined that older Units (from model years 2007 through 2014) dropped an average of $117 or 0.6 percent, which is just $5 more than last month. Black Book added late models reported a positive trend compared to May’s results. Last month, late models (2015-2016) dropped $296, which is a $15 improvement.

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