Beggs Explains Why No Sales & Price Floors Might Be Changing
So, they are perhaps not as mythical as Big Foot or unicorns. Black Book’s Ricky Beggs recently discovered while scouring the auction lanes that no sales actually do exist.
During his weekly video report, “Beggs on the Used Car Market,” the managing editor then asked, “are floors being adjusted?”
To explain his answer, Beggs began by stating, “As the week progressed, the editors continue to include more 2011 models with their initial market driven used values.
“We are beginning to see a sufficient volume of these vehicles and others each week that are being sold in the auction lanes,” Beggs continued. “This week included several car models and a couple of utility models being priced.”
So what’s driving the market today and the current trends to the point where dealers might be spotting no sales at their local action or while watching online? Beggs indicated there are more 2012 models in the market as these new units are hitting the dealers’ lots and showrooms each week.
“Normally just making room causes the 1- to 3-year-old used models to move downward, and it is showing up now with less push downward with the current used values than in most years,” Beggs surmised.
“When comparing year-over-year values, it is of no surprise that the space for the 2012 models has to be created,” he added.
As Black Book is still seeing a “fair number” of no sales, editors are also noticing that some but not all sellers and remarketers might have slightly adjusted their floors. The trend could have reduced the number of no sales just a little, according to Beggs.
“We will be watching this closely in the coming weeks. Tune in to see if this becomes a sustained trend,” he noted.
Black Book moved on to mention not all of the economic news revealed during the last couple of weeks has been upbeat. The firm also pointed out unemployment has also increased during the past couple of months to remain solidly above the 9-percent level.
“With dealers saying that the market is ‘leveling off’ to ‘coming down but still above average,’ what continues to mitigate a more typical seasonal adjustment is the words of several that ‘there are not as many vehicles’ and the ‘selection was poor,’” Beggs explained.
Before going into specific data about cars and trucks, Beggs touched on another popular topic — the weather.
“The weather was hot almost everywhere the editors went this past week — from Indiana to Tennessee to South Carolina and Atlanta,” Beggs shared.
“The Dallas area topped them all off at 113 degrees on Thursday after an awakening in the mid-60s in Detroit on Wednesday morning,” he continued. “I just wish I could report that the used market activity and values were just as hot.”
Turns out Black Book adjusted more vehicles daily on average this past week than anytime during the past year. The adjustment level came in at more than 2,250 per day.
Editors recollected the week ending May 13 was the previous peak at almost 2,100 adjustments per day.
With the large number of vehicles adjusted during the week and only 23 percent of those being increases, Beggs determined the overall average change amount of all adjustments was a decline of $105 for the week — $27 more than the previous week’s change.
“The last time we reached this large of a decline was the week ending Nov. 19, 2010 at $122,” Beggs recapped.
Looking a vehicle segments, Black Book revealed cars sunk $20 on average for the week, extending a streak of five consecutive weeks of decline.
“This was the second largest weekly decline in the cars since early in the year and the week ending Jan. 28,” Beggs noted.
“Looking at the line graph that shows the tracking of the car changes we see a pretty tight pattern for the last three weeks,” he went on to say.
Black Book found only the prestige luxury cars stood out as an outlier in the graph Beggs referenced, as the segment dropped $89.
Also, last week, Black Book determined six of the nine declining car segment types were within $11 of each other, ranging from a $22 dip for full-size cars to a $33 downturn for near luxury cars.
Meanwhile, Black Book revealed trucks now have declined for 11 consecutive weeks. This past week’s average drop of $45 was the second largest downward weekly movement since last fall and the week ending Nov. 12.
“Let’s not put the blame for this directional movement on the price of gas at the pump since this is the time period where gas has been declining in price,” Beggs suggested.
Only two truck segments showed modest prices gains: full-size crossovers (up $7) and compact pickups (up $4).
Meanwhile, six truck segments softened by more than $50, with luxury SUVs plummeting the most with a $154 drop-off.
“This trending in the market makes the Black Book Daily updated values even more valuable to you and your business,” Beggs recommended.
“Having the right inventory at the right price will drive a more profitable business,” he emphasized. “Thanks for taking the time to view this method of delivering our thoughts on the market.
“Let us know how you feel about the market while we are on the lanes, via email or better yet, simply give us a call. Have a great week,” Beggs concluded.
Beggs’ videos can be viewed here.