Beggs Talks Used-Car Impact of NAIAS Excitement
The North American International Auto Show last week brought many new redesigns to the forefront of the industry and consumers’ minds, alike. News of new in-car technology, redesigns and cutting edge alternative fuel concepts flowed through the media just last week. But will the NAIAS and all the new products that are set to hit the market affect the used-car industry?
Black Book’s Ricky Beggs touched on this very issue, starting with the used-truck market.
With the Chevy Silverado’s launch, the Ford Atlas concept "stealing some thunder" and the Dodge Ram 1500 capturing Truck of the Year, "trucks grabbed plenty of attention" at the NAIAS, Beggs said.
Consequently, the managing editor believes full-size pickups will see price strengthening in the used markets this year because of a growing economy and interest in the segment.
Beggs told Auto Remarketing, "I don’t think it (new truck models) will take buyers out of the used market. I think it will help the new market, but I think there is such a strong need and demand in the used market; that it will be strong, as well.
"I think the reason you are seeing manufacturers make the big push on trucks right now is they see the economy turning around and the housing market improving, and they see the demand that is going to be out there for the pickup truck, whether it be new or used," he continued.
Beggs also noted the increased demand for trucks will help maintain the used price level.
Another point the editor touched on was a trend seen among OEMS – it seems they may be switching generational focus.
"Clearly, manufacturers are shifting focus from Baby Boomers to a younger buyer," Black Book said in an analysis.
It appears this trend was most evident in European and Asian carmakers announcing new entry-level luxury models that will be cheaper than current offerings. Beggs explained that as the OEMs focus on and push out less expensive and perhaps smaller luxury vehicles, such as the Buick Envoy, the current luxury market may turn to the certified pre-owned market to satisfy their buying wants and needs.
"If you look at the luxury brands, Lexus and Infiniti, for example, they are coming out with a smaller car. I think that is going to bring new buyers into those portfoilios. I don't think you will see the current buyers of those models going down to a smaller model," Beggs said.
"I think the CPO luxury buyer doesn’t want that small car either. They can afford the CPO luxury model, yet don’t want to downsize in order to buy new. I don’t see this OEM trend having an effect on the CPO market for the current smallest vehicles that luxury manufacturers offer," he continued.
Another hot topic at NAIAS was fuel efficiency, but Beggs contends we’re headed down a road of too many models and players in the segment when compared with true demand.
"It concerns me a little bit because there are so many players in that market, that sub-compact and entry-level. But the manufacturers have to be players because of the CAFE requirements. That's the only way they are going to beat it is to create a smaller car," Beggs said.
He also noted the used buyer might not be comfortable with the price point for these units.
"They are selling well, but you know there isn’t a lot of room between invoice and MSRP on those cars, so they’ve got them priced about as tight as they can. But on the used side, I’m not really sure the buyer is content with that," Beggs explained.
But this all comes with a caveat.
"With the number of players that are out there, I think there are more than adequate options for used buyers out there. That is, unless we hit $5 a gallon and stay there," Beggs concluded, stressing consumers will turn toward more fuel-efficient options if this occurs.
Sarah Rubenoff can be reached at srubenoff@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.