FREDERICK, Md. -

National Auto Auction Association economist Ira Silver needed only one word to summarize second-quarter wholesale volume.

What did Silver say? He called second-quarter volume “disappointing.”

Silver revealed this week that second quarter auction volume declined 11.2 percent year-over-year after dropping 7.8 percent in the previous quarter. He indicated smaller increases in dealer consignment were more than offset by large declines in other categories.

Furthermore, flat prices resulted in a similar decline in gross value as in volume, according to NAAA.

The association acknowledged volume in the Northeast and Southeast regions declined the least in the second quarter. In fact, NAA noted the Northeast — which includes Maryland and the District of Columbia north up to Maine — is doing substantially better than other regions.

“Past large declines in new sales into leases and rental cars are continuing to reduce overall auction volume with fleet/lease and manufacturer/factory both down sharply in the second quarter,” Silver explained.

“Weak current new/used sales was reflected in the smallest dealer consignment gain in three quarters while the improved economy reduced repossession volume by over 20 percent for the second quarter in a row,” he continued.

Also in connection with volume, NAAA mentioned the decline in gas prices was quickly reflected in a relatively good performance for SUVs.

“Large declines in CUVs and passenger cars probably were related to problems in supply from Japanese dealers,” Silver surmised.

Turning next to wholesale prices, NAAA determined second-quarter prices were flat compared to the same period a year ago.

While the Southeast and the Northeast showed the least amount of volume softening, the association pointed out these two regions also posted modest price gains in the second quarter, too. But prices in both areas ticked up less than 2 percent.

Silver Examines Retail Trends

Moving away from a wholesale discussion and into a look at the retail side of the business, Silver summarized how used-vehicle sales weakened in the second quarter as prices stayed firm.

“For the first half of 2011, used-car sales were up 3.5 percent compared to 4.2 percent in the second half of 2010,” Silver explained.

“Reflecting a lack of supply relative to demand, used-car retail prices have moved up sharply in the last few months, with the second quarter up 2 percent and June up over 5 percent,” he added.

Meanwhile for new vehicles, Silver recapped industry data that showed the second-quarter SAAR slid to 12.1 million from the first-quarter reading of 13 million. He stressed, though the SAAR registered a quarter-over-quarter decline, the second-quarter mark was 7.5 percent higher than the same period a year ago.

“The second quarter slowdown can be traced to a combination of higher gas prices, a weak job market and supply problems related to the Japanese earthquake,” Silver emphasized.

“Increased supply availability of Japanese models for purchase and comparison is expected to result in higher new-vehicle sales levels in the second half,” he continued.

“As the industry normalizes and the labor market improves, new-vehicle sales are forecast to reach the 15-million level next year,” Silver added.

NAAA Takes a Look at Broad Economic Measures

Also included in NAAA’s quarterly report was Silver’s assessment of macroeconomic indicators.

Silver explained temporary factors such as the Japanese earthquake, a spike in oil prices, the debt ceiling debate and European debt problems reduced economic growth to about 2 percent at an annual rate in the first half of this year.

“While we expect growth in the second half to accelerate as the temporary problems lessen, growth will continue to be constrained by the significant drag that the absence of a housing recovery has had on the strength of the economic expansion,” Silver projected.

“However, extremely low levels of new construction are reducing the overhang of available homes,” he interjected. “With fewer houses available, and higher rents, low home prices, low mortgage rates, and a growing population boosting demand, we expect a significant move up in new home construction next year.

“In addition, as business sales continue to grow, corporations and banks will begin to increase their support of the expansion by using their massive cash balances to invest, hire and make loans,” Silver concluded.

NAAA Auction Industry Report
Percent Change From Prior Year
      Auction Volume      
   2010 Q2  2010 Q3  2010 Q4  2011 Q1  2011 Q2  2010 Annual  2011 YTD
 Total  – 5.6  – 7.4  + 2.0  – 7.8  – 11.2  -5.6  – 9.4
       Regions        
 Far West  – 8.1  – 5.6  – 1.2  – 12.3  – 15.2  – 6.5  – 13.7
 Southwest  – 3.7  – 7.1   + 2.6  – 11.6  – 12.4  – 4.3  – 12.0
 North Central  – 7.5   – 11.2  – 3.0  – 12.6  – 16.9   – 9.6  – 14.7
 Southeast  – 11.1  – 13.7  – 1.9  – 7.2  – 6.7  – 9.6  – 7.0
 Northeast  1.3  0.4  11.3  + 1.1  – 7.4  + 1.1  – 3.1
       Sales  Type      
 Dealer  + 10.0  + 1.6  + 21.2  + 13.3  + 9.9  + 8.7  + 11.6
 Fleet/Lease  – 16.1  – 16.7  – 17.7  – 24.3  – 27.6  – 15.7  – 25.9
 OEM/Factory  – 24.5  – 23.1  13.6  – 27.2  – 40.7   – 26.0  – 33.0
 Repossession  – 13.2  – 21.9   – 9.5  – 24.9  – 23.0  – 12.6  – 24.1
       Segment        
 CUV  + 2.5  – 0.1  + 9.3  – 4.2  – 11.4  + 1.6  – 7.7
 Passenger Car  – 1.9  – 5.1  + 3.8  – 8.1  – 12.9  – 2.5  – 10.4
 Pickup  – 10.5  – 12.7  – 4.1  – 13.9  – 14.3  – 9.9  – 14.1
 SUV  – 13.1  – 14.0  – 5.1  – 7.5  – 5.0  – 12.8  – 6.3
 Van  – 15.8  – 8.9  + 5.6  – 0.8  – 5.2   – 12.4  – 2.9
               
       Auction  Price      
   2010 Q2  2010 Q3  2010 Q4  2011 Q1  2011 Q2  2010 Annual  2011 YTD
 Total  + 4.7  + 0.3  + 1.9  – 0.1  – 0.1  + 3.7  – 0.1
       Regions        
 Far West  + 2.7  – 0.5  + 1.2  + 0.9  – 1.0  + 2.2  0.0
 Southwest  + 5.5  + 0.9  + 3.3  + 1.5  – 0.2  + 4.2  + 0.7
 North Central  + 7.7  – 0.2  + 1.3  – 2.0  – 3.8  + 4.5  – 2.9
 Southeast  + 6.1  + 1.9  + 2.9  – 0.7  + 1.8  + 5.4  + 0.4
 Northeast  + 2.2  – 0.3  + 1.3  + 0.6  + 1.6  + 2.3  + 1.1
       Sales  Type      
 Dealer  + 9.6  + 7.1  + 9.1  + 7.2  + 9.0  + 10.2  + 8.0
 Fleet/Lease  + 8.2  + 2.2  + 3.8  + 2.4  + 1.4  + 6.7  + 1.9
 OEM/Factory  + 15.0  +8.3  + 0.9  + 8.7  + 11.2  + 12.6  + 9.3
 Repossession  – 4.0  – 11.9  + 2.5  + 4.8  + 15.2  – 2.2  + 9.4
       Segment        
 CUV  + 8.7  – 0.7  + 0.2  + 0.9  – 2.1  + 5.1  – 0.5
 Passenger Car  + 2.9  – 0.7  + 1.7  + 1.6  + 7.4  + 2.2  + 4.4
 Pickup  + 3.9  – 0.3  + 2.6  – 3.8  – 9.6  + 4.1  – 6.5
 SUV  + 5.1  + 2.5  + 1.1  – 4.0  – 11.8  + 4.7  – 7.7
 Van  + 8.4  + 5.1  + 10.6  + 3.5  – 0.4  + 7.3  + 1.6