Beggs Notices ‘Normal’ Wholesale Price Change as Gas Prices Dip Again
As gas prices continue to soften, the Black Book team finally began to see wholesale price trends for trucks and cars reacting as “one might normally expect,” according to Ricky Beggs.
Beggs pointed out that fuel costs dipped another 4 cents last week to push the total decrease compiled during the past five weeks to 15 cents.
With fuel costs dropping, Black Book editors adjusted wholesale prices for 2,097 vehicles per day last week. From these adjustments, they noted the smallest percentage of vehicles increasing in price since the week ending Feb. 24 — a full 12 weeks ago.
Of those increases, Black Book determined that the average increase of $94 was the second smallest jump since the week ending Feb. 17, which was 13 weeks ago.
After ticking off the data points, Beggs used the next segment of his weekly online video commentary to relay dealer comments Black Book has received.
“After looking at the comments from the dealers included in the survey personnel reports, overall they fall into place as expected,” Beggs said in the latest edition of “Beggs on the Used Car Market" report.
The managing editor continued with, “There were even more comments relating to an increase in the number of ‘no sales and the market being ‘slightly off.’
"An interesting comment from a North Carolina auction indicated the ‘dealers’ lanes showed better results,’” Beggs went on to say. “After talking with several remarketers during the week, many of them are having higher no sales percentages by design. Their backlog of inventory to remarket remains at such low supplies that they don’t see the urge to downwardly adjust their existing floors.”
Beggs moved on to talk about specific vehicle segments, beginning first with trucks that he thinks “you could say turned the corner.”
Black Book indicated that prices for seven of the 14 truck segment types increased for the week, but the overall movement resulted in a downtick of $1 — the smallest decline in the past five weeks.
Editors watched prices for full-size crossovers jump for the third week in a row, rising $32 this past week. Meanwhile, they have seen prices for full-size SUVs climb for 10 consecutive weeks.
“Somewhat surprising was the amount of decline for the midsize crossovers at $40,” Beggs pointed out. “The largest percentage change for the week was with the cargo minivans at an increase of 0.4 percent.
Sliding over to car segments, Black Book found prices overall dipped $12 or 0.08 percent. Only one specific segment posted a price gain last week — compact cars — which rose $7.
“This is a run of 11 weeks of positive adjustments,” Beggs highlighted.
Meanwhile, rising streaks for two cars segments ended last week as prices for entry level cars dropped $9, halting four-week climb, and midsize cars ticked $2 lower, stopping a 12-week ascent.
“Even with the overall declining average amount of the cars and trucks we still see a pretty solid market overall,” Beggs emphasized.
“There are a few more cars coming into the market through the trade-in process as new-car sales continue to increase,” he continued. “This is being offset somewhat as the end of term lease contracts continue to decline and should continue this pattern through the end of December before starting to increase again after a couple of months into 2013.
“Even though the struggling economic news continues to lead the headlines from Europe, we are starting to see positive signs that the long awaited improvement in most economic venues in the U.S. is opening up the pent-up demand for both new and used product,” Beggs went on to say.
Beyond watching what is happening in the lanes, Beggs shared an update on other company activities.
Beggs and Bret Swanson received an “up-close look and detailed information” on the just released 2013 Infiniti JX crossover utility.
“Versatility with greater fuel economy in a product is at the top of many shoppers’ list,” Beggs noted. “The features and luxury being offered by Infiniti on this new model addresses these expectations head on.
“With a longer wheelbase and overall length than the EX & FX models, and priced in between, gives the consumer another viable option,” he continued. “Even though engine displacement is the same 3.5L, horsepower and torque are lacking somewhat as compared to the 2012 EX & FX.
“Over the next couple of weeks we will be analyzing this product as it stands within the segment and the competitors to project an accurate residual forecast that might just make this new utility one of the best lease deals within the upper end crossover vehicle offerings,” Beggs went on to say.
“We will be back on the auction lanes again this week to see how the market will react. We hope to see you there bidding aggressively for inventory replacement and also to increase your overall offerings. We hope you have a great week,” Beggs concluded.
Beggs’ video can be viewed below.