Beggs Uncovers Dealer Sentiment about Aging Trade-ins
As used-car managers know, dealer consignment might be the busiest lane on sale day, so Black Book took a longer look at the trends of trade-ins flowing into auctions nowadays.
Black Book’s Ricky Beggs recapped recent editorial team discussion as the editors wondered “whether the trade-ins were aging any over the past year or so as more people had stayed out of the new-car market.
In his latest online blog post from “Beggs on the Used Car Market,” the Black Book veteran highlighted what he and other editors have heard on the subject.
“This past week a dealer in Pennsylvania told us that many of his trades today were two to three years older than what was normal,” Beggs mentioned. “We are watching the cars that are now a little older, and the edgier cars with some bad history, to also see how this is affecting the newer models, those one- to three-year-old cars and trucks.”
Whether it was dealer consignment or another wholesale volume source, Black Book discovered this past week that overall price softness continued. The average unit price went down by $29.
One car segment actually moved up in price, however, as Black Book noticed a $3 uptick for entry sporty cars.
What Beggs said wasn’t surprising were the four best fuel-efficient segments leading the way in car price declines. That group included upper midsize cars (down $60), compact cars (down $51), entry level cars (down $47) and entry midsize cars (down $44).
Beggs reiterated, “Didn’t I earlier mention that gas is 5.7 cents cheaper this week?”
What Beggs referenced was Black Book’s information that showed gas prices slid another 5.7 cents this past week to a national average of $3.61 per gallon.
However, Beggs pointed out unemployment reports indicated a slight uptick.
“So one item is good for our pocketbooks (and for) consumers, and another is not so good,” Beggs said.
Getting back to an analysis of wholesale prices, Beggs noted that for the first time in several months all 14 truck segments declined as three segment types sunk by $50 or more.
Prices for midsize crossovers dropped the most, registering a $65 drop while prices for full-size crossovers slid down by $53.
“The real surprise was not that the compact sport utilities declined, but the $50 level of change,” Beggs explained. “This segment had been the lone positive retention segment for the previous three weeks.
Overall truck prices dropped by $37, a figure $8 higher than the previous two weeks.
With so much price softening, Beggs admitted he wasn’t surprised that only 16 percent of Black Book’s necessary value changes resulted in an increase. He indicated the level was the lowest number of positive adjustments since the week ending Nov. 23.
Beyond gas prices, Beggs touched on more reasons why wholesale prices are on the way down.
“The softness in the market, especially the one- and two-year old models is driven partially as the market is making room for another model year,” Beggs said. “The 2013s will be here before we realize.
“Getting ready for these newest models, several of the editors had the opportunity to attend manufacturer presentations of these coming new models and also some of the impressive changes to the existing models,” Beggs continued. “With totally new cars such as the Dodge Dart and the Cadillac XTS, for example, the initial interest is pretty strong.
“With some refreshes, such as the V6 engine upgrade like will be found with the 3.6L V6 in the Equinox and Terrain, you get better horsepower and performance and at least as good fuel economy,” he went on to say. “There are interior upgrades giving better ergonomics within the center stacks on other models as well. All of these will eventually play a factor in the future used values.”
Beggs wrapped up his latest online blog entry with a couple more reports from auction survey personnel.
“From the lanes and survey reports there were some interesting comments,” he offered. “There was a report out of Michigan showing ‘sales percentages are down and neither buyers nor sellers are happy.’ A Texas report from the Houston area indicated a ‘slightly better market’ while back East we saw ‘mostly picky buyers.’
“Within the Black Book mobile solutions apps you have the opportunity to pull a history report immediately while standing on the auction lanes or in the lot of the dealership from Carfax or AutoCheck,” Beggs went on to say. “A Florida report said that ‘history reports definitely affect the interest in a car on the block.’
“As the values of used cars, trucks and utilities continue the adjustments and current trending, you will see the Black Book survey personnel and the editors on the lanes, where you the dealers, are setting the market,” Beggs added. “Let us know how you are seeing the market. We hope you have a great week.”
Beggs video can be viewed below.