Beggs: Wholesale Surge Dips Slightly
Prices in the wholesale market continued to move upward this past week, though the pace of increase was not as drastic as it had been in weeks before, according to Black Book managing editor Ricky Beggs.
Specifically, 58 percent of value adjustments Black Book made last week were upward changes. While this is certainly a strong number, it marks the first time in eight weeks where less than 60 percent of the changes were positive, he pointed out in the latest “Beggs on the Used Car Market” video report.
The market showed an average upswing of $121, down from the average upswing of $128 the prior week.
“Overall, the difference, taking all changes into account, brought an increase of $14.26 for clean condition models and $11.70 for average condition models,” said Beggs.
Offering some overall wholesale insight from dealers, auction personnel and Black Book survey personnel, Beggs noted: “Dealers are still amazed at the value levels of many vehicles, while several comments were passed along as to ‘more no sales’ and ‘lots of ifs.’
“Something not all that different, but as a buyer and a seller you must keep in your mind that ‘well-equipped units will bring a premium,’ while ‘common units are flat,’ he continued. “So as a seller of the top of the line, loaded with equipment model, you might want to hold the line on a strong floor, and as a buyer, you might have to pay a little more for that special unit.”
Beggs stressed that with used supply remaining tight, dealers might not be as “selective” in their bidding, saying, “condition has less effect on the value.”
He added: “While talking with several auctioneers this week, many were seeing the bidding ‘not as strong to get that extra dollar.’”
Beggs went on to talk about another aspect of used supply shortage — the impact of the Japanese disaster.
He suggested that with several plants already trimming production levels, the supply on some units in the coming weeks will be even more “exacerbated."
“As one dealer told me, when you are selling 70-80 units a month, with limited models coming down the pipeline, it doesn’t take long to run out of inventory,” Beggs shared.
“From various parts of the country there were comments that retail on the West Coast was still strong, while a few dealers from the Eastern part of the country were holding back on some wholesale purchases because retail had slacked off recently,” he added.
Moving on, Beggs also broke the week’s wholesale data down by segment, beginning with cars.
On this side of the market, entry midsize cars were the top mover (up $42), followed by entry-level cars (up $34), as nine of the 10 segments Black Book tracks showed gains. Prestige luxury cars, whose values fell $22, continued to be the only segment to see a drop-off.
“With overall car segment changes still above the $0 baseline, the increase week-over-week is getting smaller each week,” Beggs shared.
Moving over to trucks, only five of the 14 categories Black Book monitors fell in value and the overall truck market was above the $0 baseline for the sixth straight time.
Full-size SUVs showed the heftiest drop at $127 and full-size crossovers were next (down $47).
Meanwhile, compact pickups moved ahead $108. This marked the seventh time in the last eight weeks where this segment has grown.