Beggs: Are Typical Fall Wholesale Price Conditions Finally Here?
Black Book’s staff watched the calendar quickly approach October, wondering when typical fall wholesale market conditions would appear.
As managing editor Ricky Beggs indicated during his latest “Beggs on the Used Car Market” video report, those conditions might have finally arrived.
Last week, Black Book made the most adjustments since the week that ended March 19. Last week, the editors modified 9,474 vehicles — the most since they adjusted 11,187 units during that March span.
Furthermore, Black Book calculated the number of daily adjustments at 1,895 per day was almost twice the average number in the previous five weeks. About 985 units changed per day during those five earlier weeks.
“Over the past month or so we have questioned if or when the typical fall market adjustment might appear,” Beggs began. “There have been slight off and on indications with weeks of greater ‘no sales’ followed by then greater sales conversions the next week.
“I must say that based on the necessary adjustments by the editors this past week that we have the strongest indication yet this fall that the market is acting more like a typical fall where the leaves are starting to fall and so are the prices,” Beggs continued.
Besides the sheer number of adjustments, Black Book also found last week a declining percentage of adjustments that were increases in value. Beggs said only 14 percent of the adjustments constituted a price rise. The percentage hasn’t been that low since the week ending Dec. 31 of last year when only 6 percent of adjustments went up.
Perhaps not surprisingly, overall truck and car segments sunk last week.
Turning first to truck values, Black Book pinpointed the overall decline at $72.35. This marked the steepest drop since Jan. 8 when the average slipped $77.61. Also, Black Book said all 14 truck segments dropped last week, the first time that’s happened since the final week of 2009.
Beating the segment average was midsize crossovers, which dipped just $29. Beggs mentioned three truck segments that performed worse than the average last week — full-size crossovers (down $166), midsize pickups (down $104) and the full-size pickups (down $101).
Moving over to the car segment, Black Book computed the overall decline came in at $46. For the first time in six weeks, the car drop wasn’t greater than the one sustained in the truck segment.
The string of declines for prestige luxury cars and the premium sporty cars now has reached 12 consecutive weeks. But Beggs noted a few segments that performed much better.
For example, Black Book found upper midsized cars slipped just $8, while compact cars declined $9. Also, entry midsize cars beat the segment average, falling $16, as did entry level cars, which dipped $20.
In other elements of the video report, Beggs shared the experiences of his Black Book colleague Terry Park, who serves as the senior car editor. Park took some time this past week to get a first-hand view of the new Kia Optima.
“His initial thoughts were very upbeat about the major physical restyling while being impressed by the performance and fuel economy from the 4-cylinder power plant,” Beggs offered.
“This early and quick evaluation and comparison to the previous generation Optima adds insight and understanding as we project realistic residual values for the current models,” he added.
Beggs got the chance to analyze a vehicle first hand last week, too. He delved into the electric-vehicle space.
“New technology is appearing throughout the industry, and especially in the hybrids and electric plug in cars,” he noted. “The Leaf and Volt are definitely getting the most attention and expectedly so.
“I had the chance this past week to take a ride in the CODA electric sedan,” he went on to say. “Not only is the car and technology totally new, the price of $44,500, prior to any federal or state tax credits or incentives, makes it a pretty expensive entry from a brand new manufacturer.”
Beggs wrapped up his report by reiterating how Black Book recently rolled out an application for the Droid operating system. Dealers now can download the app to obtain the latest daily values. For more information, they also can call (800) 554-1026.
With this week encompassing the first day of October, Beggs emphasized Black Book is prepared to see how the wholesale market behaves as fall gets into full swing.
“It has been a busy week, and based on the trends from last week, we will be concentrating even more so to report this week’s market directly from the auction lanes,” Beggs concluded.