NAAA: Auction Volumes Post First Gain Since 2008
In what should be good news for dealers and auctions, the National Auto Auction Association discovered 2010 fourth-quarter volume jumped 1.4 percent compared to the year-ago quarter.
NAAA economist Ira Silver said this rise marked the first year-over-year gain since the first quarter of 2008.
However, one region fueled most of that fourth-quarter growth. The Northeast region — including the states of Virginia to Maine — enjoyed a healthy volume climb of 10.6 percent. NAAA’s Southwest region — states such as Texas, Oklahoma and Arizona — also showed a year-over-year uptick of 2.2 percent.
The rest of the regions sustained a downward push in fourth-quarter volume. NAAA indicated the Far West slid down by 1.4 percent; the North Central region was off by 3.7 percent; and the Southeast slipped by 2.4 percent.
While not all regions fared as strongly, the fourth-quarter volume drops in some areas weren’t quite as steep as in the past. For example, the Southeast’s decline in the fourth quarter ended a string of double-digit drops in each of the previous three quarters. The Far West, North Central and Southwest regions also had improved volume readings in the fourth quarter compared to the rest of the year.
Nonetheless, NAAA calculated that 2010 volume was down 5.7 percent, the third annual decline in a row.
Only one region — again the Northeast — finished last year with a positive annual volume gain. Silver said it settled at 1.0 percent.
The other four regions sustained annual volume drops ranging from 4.4 percent in the Southwest to 9.7 percent in both the North Central and Southeast.
But Silver spotted hope for increased volume in 2011.
“We expect volume to show a small increase this year as the pickup in new sales increases supply,” Silver speculated.
NAAA went on to offer some fourth-quarter and annual analysis of auction sales type, emphasizing increases in dealer consignment.
The association determined dealer consignment spiked 20.5 percent in the fourth quarter compared to the same quarter of 2009. For the year, Silver said dealer consignment volume climbed 8.6 percent.
While dealer consignment contributed mightily to auction volume, the other three sales types NAAA tracks posted mixed performances in not just the fourth quarter, but all of 2010.
Manufacturer volume grew by 13.2 percent in the fourth quarter, halting a string of year-over-year quarterly declines that climbed as high as 41.6 percent. As a result, NAAA indicated OEM volume finished 2010 off by 26 percent from the previous year.
What’s probably not surprising to dealers is a double-digit drop in fleet/lease volume. NAAA pinpointed the fourth-quarter dip at 17.9 percent, pushing this sales category to an annual drop of 15.8 percent.
“Weak past new sales continue to limit the supply from fleet/lease sources,” Silver stressed.
Meanwhile, repossession volume finished 2010 in stark contrast to the previous year. The 10.4-percent decline in the fourth quarter pushed repo volume down 12.9 percent last year. In 2009, the association pointed out repossession volume spiked 32.6 percent year-over-year.
“Repos declined for the fourth quarter in a row, reflecting the better economic environment,” Silver offered.
NAAA also broke down data by vehicle segment. Like the regional and sales-type performances, fourth-quarter and annual changes varied by segment.
Three segments — CUVs, passenger cars and vans — moved higher in the fourth quarter, with CUVs leading the way with a gain of 8.9 percent. Van volume climbed by 5 percent and passenger car volume edged up 3.3 percent.
Pickup and SUV volume, on the other hand, slipped in the fourth quarter, dropping 4.8 percent and 5.7 percent, respectively.
For the year, only one segment managed an increase. NAAA indicated annual CUV volume ticked up 1.5 percent after moving higher by 4 percent in 2009.
Three segments posted volume drops of 10 percent or more in 2010. The association stated these were pickups (down 10 percent), SUVs (down 12.9 percent) and vans (down 12.6 percent).
Passenger car volume also dipped year-over-year in 2010, slipping 2.6 percent.
Fourth-Quarter & Annual Price Analysis
As dealers readily felt throughout 2010, volume seemed sparse at times while prices appeared to steadily move higher. NAAA’s data backed up that assessment.
Looking at both the fourth quarter and annual comparisons, Silver determined that each category — regionally, by sales type and by segment — saw prices move higher.
“Since prices were also up, gross value increased,” Silver pointed out. “In fact, the fourth quarter was the first quarter in three years that volume, price and gross value were up together.”
Looking first regionally, fourth-quarter prices crept up no higher than 3.6 percent in any single region. That high mark came in the Southwest, NAAA noted. Fourth-quarter prices moved up 3.2 percent in the Southeast, 1.6 percent in the Northeast and 1.3 percent in both the North Central and Far West.
On an annual basis, upward regional price movements ranged from 2.2 percent in the Far West to 5.5 percent in the Southeast. The association calculated annul prices climbed 2.4 percent in the Northeast, 4.3 percent in the Southwest and 4.5 percent in the North Central.
Looking by sales type, the fourth quarter represented the second time in 2010 when dealer consignment, fleet/lease, manufacturer and repos all crept upward. NAAA determined dealer consignment prices jumped the most at 9.3 percent, while fleet/lease ticked up 3.9 percent and repossessions had a 2.9-percent rise. OEM sale prices ticked up by just 0.9 percent.
While smallest in the fourth quarter, NAAA determined manufacturer prices climbed the most in 2010, a gain of 12.6 percent. Dealer consignment prices also rose by double digits last year at 10.3 percent. Fleet/lease prices moved up by 6.7 percent, but the association noted repo prices actually settled down by 2.2 percent.
Finally, while most vehicle segment prices posted small upward gains in the fourth quarter, the association revealed van prices jumped 10.8 percent. That rise was more than CUVs (0.3 percent), passenger cars (1.9 percent), pickups (2.8 percent) and SUVs (1.3 percent) combined.
On an annual basis, NAAA calculated that vehicle segments rose year-over-year by at least 2.2 percent. Passenger cars represented that low mark with the others climbing higher: CUVs up 5.2 percent; pickups up 4.1 percent; SUVs up 4.7 percent; and vans up 7.3 percent.
“Rising prices while unit volume is down reflects supply constraints created by the sharp declines in new sales during the recession,” Silver stated.
New & Used Sales Analysis
Silver reiterated widely reported data that showed new light-vehicle sales picked up in the fourth quarter to an annual rate of 12.3 million units — the highest quarterly total since the third quarter of 2008. He mentioned that new-vehicle sales for 2010 settled at 11.5 million units, a year-over-year increase of 11 percent.
“With a stronger economy this year, we expect new sales to increase almost 17 percent to 13.5 million units,” Silver declared.
The NAAA economist turned next to used-retail sales, mentioning that sales in the quarter climbed more than 10 percent after coming in nearly flat during the previous period. All told, Silver pointed out used-retail sales totaled 36.9 million last year, a 4-percent increase over 2009.
“This year we expect about a 6-percent increase to 39 million units,” Silver projected.
Broad Economic Analysis
Silver wrapped up his analysis by touching on some macroeconomic figures. He noted real GDP growth at an annual rate accelerated from 1.7 percent in the second quarter to 2.6 percent in the third quarter of last year. He expects this figure to come in at about 3.5 percent for the fourth quarter.
He went on to mention 2010 real GDP is anticipated to be up about 3 percent and forecasted to increase at about 3.5 percent this year.
“After a second-quarter slowdown in economic growth related to political and policy uncertainty and debt problems in Europe, economic growth has accelerated,” Silver insisted.
“The election and the tax and spending compromise have eliminated most of the near-term policy uncertainty and Europe is addressing its debt problems,” he continued. “In addition, the Federal Reserve has expanded its monetary stimulus program to include keeping long-term interest rates relatively low. These actions have resulted in a pickup in domestic spending and exports.”