GAINESVILLE, Ga. -

Along with offering his monthly look at the specialty markets, Black Book’s Ricky Beggs indicated last week was a busy one for the editors because of how many vehicles they adjusted per day.

While not quite reaching the near-record figure of 2,625 per day for the week ending Sept. 16, Black Book averaged 2,078 vehicles adjusted each day last week.

While adjustment volume rose, Black Book didn’t see many prices moving higher, as just 18 percent of those adjustments were increases. Beggs noted it was the smallest amount of rising price adjustments since Sept. 30.

With so many vehicles slipping in price, the overall price drop hit its highest level in five weeks — an average decline of $84.
“As the dealer and survey personnel comments came in this week, they ranged widely in how they saw the market,” Beggs shared in his weekly video report, “Beggs on the Used Car Market."

He continued by stating, “While someone saw ‘a more stable market,’ another dealer said it was ‘a tough market to sell in.’

“Several dealers commented that there seemed to be more dealers on the lanes showing interest. The most consistent comment referenced the under $10,000 units being in strong demand,” Beggs went on to say.

Turning next to look specifically at cars and trucks, Beggs returned to a topic that often sways the wholesale market — gas prices.

“With gas prices moving all over the board, they are still well under peak prices,” Beggs acknowledged. “This seems to be pushing or pulling buyers to the trucks and SUVs and away from the car segments.”

As a result, Black Book tabulated that car segment prices dropped $75 overall last week, the largest dip since Nov. 19, 2010.

“I continue to be amazed at how little of a move in gas prices drives consumer interest into various segment types,” Beggs stressed.

With the extra interest in trucks and SUVs, Black Book has seen the major strings of decline with six of the 10 car segments dropping for the past three weeks or longer.

Last week’s best car performer still suffered a decline as the editor pegged the drop for full-size cars at $16.

Beggs then interjected, “Did I mention the price of gas pushing interest to trucks?”

After seeing truck prices slide significantly this summer, Black Book found three truck segments increase last week. That contingent included full-size vans in cargo and passenger versions up $8 and $22, respectively, while mid-size pickups (up $7) joined them.

Also noteworthy among trucks were compact pickups ticking down $8.

Softening even more this past week than the previous one were compact SUVs, tumbling $99 after falling $54 the previous week as well as mid-size crossovers, which sunk $91 after dropping $55 during the previous week

“With all of these changes, the trucks still remain more stable in overall change for the past six weeks. Within this time period there is only an $11 variance in the weekly change amount,” stated Beggs, who added the decline has ranged from $43 last week to $32 for the week ending Sept. 30.

Black Book noted it has been working diligently to complete the residual projections on the 2012 models as they hit dealers’ lots.

“The 92 2012 models now published and included in the November/December Black Book Official Residual Value Guide are solid numbers for your leasing programs,” Beggs insisted.

“More are in the works as the various manufacturers present their models for retail sale,” he continued. “As a subscriber to this printed guide, all access to future residual projections effective Jan. 1, 2012 will be through our online electronic products. Please contact your Black Book sales representative for more information.

“From the varied comments at the auctions this past week, we can’t wait to see what will present itself on the auction lanes this coming week,” Beggs added. “We’ll be there, all across the country, to report those changes.”

Introduction to Specialty Market Update

Beggs admitted the specialty markets reported by Black Book have kept editors extremely busy during the past month.

“During the active seasonal adjustment period getting the right data and reporting the right interpretation of that data has kept us focused,” Beggs shared.

“The market specific editors for each specialty market have attended auctions and broken down the data,” he continued. “This means the traditional auction data, as well as that acquired electronically from other auctions and marketing venues. The changing trends are not earth shattering adjustments, but it is important for everyone in these specialty markets to have the most current values and market insight.”

Motorcycles and Powersports

During October, editors stated wholesale conditions were pretty normal in the various segments of motorcycles and powersports units.

“Sales volume at the auctions has been a little light with generally declining prices across most segments,” Beggs explained.

“Many units at the auctions have been coming from dealer consignments as they adjust their inventory for the fall and winter seasons while inventory from the banks and finance companies continues to be a little lower in volume than in years past,” he highlighted. “This is a direct effect of the past several years of reduced new unit sales volume from the recession. This is a very similar pattern in the auto markets.”

In regard to snowmobiles, Black Book noticed prices on the way up in October just like the previous month.

“They still have not taken any huge jumps but are increasing by around 2 to 3 percent, versus last month for most late model units,” Beggs surmised.

“Percentage increases on older models are frequently more, but that is mainly due to their lower overall average selling prices where small dollar increases look large when expressed as a percentage change in value,” he went on to say.

Black Book indicated personal watercraft and jet boats are once again down, but by smaller amounts than editors witnessed in September.

Three segments that have shown some strength are ATVs, utility vehicles and sport bikes.

“ATVs and utility vehicles, as we have mentioned numerous times before, tend to increase in value at this time of year as farmers and outdoorsman use these vehicles heavily,” Beggs reiterated. “This fuels a rise in demand that brings with it higher prices.

“What is slightly more surprising is the rise in prices of sport bikes,” Beggs acknowledged. “It remains to be seen whether this is a one month thing, or a bigger trend. Stay tuned and we will keep you abreast of whatever changes occur in the market in the future.”

Beggs reminded dealers who moved these units that if they have any questions, comments or concerns about anything in the motorcycle and powersports market, they should call Scott Yarbrough, the Black Book motorcycle market expert and specialized editor.

“He will be glad to give you the latest insight into this exciting and profitable wholesale market,” Beggs stressed.

Recreational Vehicles and Trailers

Since it’s late fall in the South and winter came early in the North with a major snowstorm, Beggs pointed out most RVs have been winterized and put away for the winter

“We are starting to see activity cool off a little at the wholesale auctions as well,” Beggs pointed out.

Still, Black Book watched motor homes tick up slightly in the past month, gaining $86 for less than 0.2 percent of the $42,271 average sales price.
Editors also said towables, including travel trailers, fifth wheels and camping trailers, reversed their declines and actually rose $14 for 0.1 percent of the $9,884 sale price. 

“Typically, this is the time of the year that RV prices start to decline, as most dealers are hesitant to make any large purchases that will probably sit on their sales lots until early spring,” Beggs explained.

“If you are a dealer in the part of the country that stays fairly warm in the winter, southern California, Arizona, New Mexico or south Florida, this may be a good time to make some inventory purchases while other dealers are sitting on the sidelines,” Beggs recommended.  “Lenders are still repossessing delinquent units, and although some may hang onto them until the spring market heats back up, many will want to cut their losses and get the units off their books.”

CPI Collectible Market

For dealers and enthusiasts who collect, trade and follow the CPI market, Beggs thinks they are sure to have heard how strong the most recent auctions have been.

“Monterey was huge, and Barrett Jackson’s Las Vegas sale was very good, as was RM’s Labor Day sale,” Beggs recapped. “The stock market is still a roller coaster, gold is going crazy and home values are still soft in most of the country. Is it any wonder that people are starting to put their money into collectible cars again?”

To reinforce his point, Beggs pointed to the sale where the world’s oldest running car, the 1884 De Dion Bouton Et Trapardoux Dos-A-Dos Steam Runabout sold for more than $4 million at RM Hershey.

“The headline-grabbing sales at the auctions were for the multi-million dollar cars that most collectors will never have a chance to own,” Beggs acknowledged. “But their sales performance gives us a pretty good indication of the direction of the market as the lower priced cars usually follow the lead of the high profile cars.”

Like RVs and motor homes, Black Book said this is the time of year when a lot of collectors put their cars away for the winter.

“It is very important that you use a fuel treatment that compensates for the current 10 percent ethanol blend that is sold in most areas of the country,” Beggs suggested. “If you don’t, or use a regular fuel stabilizer, you may have a very unwanted surprise come spring when you go to wake up your hibernating vehicles.”

Medium and Heavy Duty Trucks and Commercial Trailers

This month brings the 10th anniversary of Black Book publishing current market values for the medium and heavy duty trucks and commercial trailers.

“From its initial publication in November 2001 when the total auto industry was dealing with almost irrational market changes, the MD & HD and Trailer Guide has grown tremendously,” Beggs highlighted. “The printed guide still reports on 10 model years, while the electronic products have expanded to monthly updated values covering 20 model years from 2011 back to 1992 models.”

For another month, Black Book discovered medium duty and heavy duty trucks and commercial trailers have continued to bring consistent values without showing much depreciation.

“In our opinion they have pretty much peaked,” Beggs projected. “This is mainly because prudent business decisions made by funding sources realize that higher values mean carrying too high of a balance on this equipment.

“The main reason that this balance carried has maxed is the contingent liability of the cost to repair an engine or transmission or both,” he continued. “These diesel engines are very expensive, and the repairs could easily be over half the funded amount. That being said, I believe values will continue to be strong with possibly the traditional lull during the holidays, followed with a strong spring.”

Black Book editor Charles Cathey — who Beggs said lives and breathes the medium and heavy duty truck market — defined a late model or “New Used Truck” as being no older than 2 years old.

“For years the new year models have pretty much been released in the fall and we have always used October as the month for model age change,” Beggs explained. “Over the past decade or so, this tradition has been broken with new models being introduced throughout the year, mainly January and in the spring. This practice can sort of jump start the new model while it kind of challenges the cycle that is created when you have truck birthdays all in the same month.

“This is a significant factor when average miles, over miles and under miles are used in calculating values, not to mention that the average truck age is higher than ever,” he added.

In 2006, Black Book pinpointed the average unit age was about 7 years old. Five year later, the average age is a little more than 8 years old.

Black Book recently conducted a study looking at average wholesale values for 2 year old Class 8 highway 6×4 road tractors, what editors would consider “New Used Trucks.”

“The numbers are pretty interesting to us, and we expect the trend to continue, mainly to avoid high new truck prices which include federal excise tax and emission equipment costs,” Beggs shared.

“The big fleets will continue to buy new, although we think they will look at life cycle costs more than ever and run trucks longer,” he continued. “The next tier of Class 8 highway 6×4 road tractor buyers will be buying more ‘New Used Trucks’ as long as they can find them.”

Black Book mentioned that there was only minor depreciation from 2005 to 2009.

“The period from October 2009 to the end of October this year shows the current strength in values and supports the recent demand for the ‘new used truck,’” Beggs said. “Another point of interest is the closing of the gap from 2005 to 2011from the least expensive model to the most expensive model of this group of trucks.”

Beggs wrapped up his look at the specialty markets by stressing, “We truly appreciate your time and interest while viewing and listening to our thoughts on the specialty markets. We welcome your calls or emails as to how you see these very special markets. And if you spot one of us at the auctions, make sure you shout out to us.”