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Strength in Value Retention Creating a Stronger Starting Point Than Normal

Following is the latest used car market report from Ricky Beggs and Black Book. The top 2 headlines on national sports news over the past week have had no connection or relation to a specific game or competition. At least the headlines out of Detroit during the North American International Auto Show have been all about some exciting new products that will hopefully be in showrooms soon. There is also talk of increasing production in US plants and increasing sales. Is this one of the next steps in eventually getting back to a consistent 16 million annual new car sales benchmark?

The numbers out of the used wholesale activity during the past week seem to have indicated hesitancy in the buyers to build retail inventory from the auction lanes. Or maybe it is the sellers, through holding onto some strong floors, which might be holding back better sales conversions and possible increasing prices.

Let’s take a closer look at the results of the data from the past week. Through many auction reports from the Black Book Editors and survey personnel, the primary comment reflects around the strong number of no sales. The weather is often a factor and even though it is winter time, the liquid form of snow or I should heavy rain affected and hindered many sales. If there was a more positive reflection it was focused on the slightly older cars that get a little extra attention during “tax time” and also the interest in the really clean condition cars having better sales conversion rates. 

It was a very active week in the number of vehicles that required an adjustment. At 2462 vehicles adjusted each day throughout the week, this was the largest number since the week ending September 14, 2012. Another indication in the level of change was that 19 of 24 segment types had over 50% of their models with a change. The Mid-size Pickups (MPT) and the Compact Pickups Trucks (CPT) came in with 93% and 70% of their models with changes. With this many models being adjusted we see plenty of interest, but at different values than previously sold and published.

The primary adjustments are decreases in value as 13 of the 24 segments had 40% or more of their vehicles being decreases. These were led by the Prestige Luxury Cars (PLC) at 60% and an average declining adjustment of -$334. Overall the cars had an average segment change of -$64, the largest weekly declining average since the week ending November 30, 2012. When looking at the car segments, 4 different individual segment types retained values in a dollar level better than the total car segment average every week for the past quarter of time. The types ranged from the Compact Cars (SCC) to the Full-size Cars (FSC) as well as the Entry Level Cars (ELC) and the Entry Mid-size Cars (EMC).

The trucks continue to show more stability than the cars. This past week the change at -$28 was slightly better than the previous weekly change of -$36. Four segments increased for the week as compared to only 2 increasing segments for both of the first two weeks of the year. The strength continues for the Cargo and Passenger versions of the Full-size Vans and was joined by the increases in the Cargo Minivans (MVC), which is a small volume segment, and the Compact Pickups (CPT).

Within the market, the Editors have now captured enough auction data to report the initial market driven values for another 12 models this past week. The Black Book Internet Suite Weekly Adjustment Report helps you easily identify these models.

Most years the activity and values show increases for this time of the year. Even though that is not the case so far this year, we do not feel this is a cause of concern or an indication of a year-long weak used car market. The strength in value retention during December was above the norm, creating a stronger starting point than normal and giving us a chance to ease into the new year. To see if this trend continues, tune back in next week for the latest update. Have a great week!

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