Should Dealers be Hesitant to Buy?
Given today’s high used-vehicle prices and the uncertainty about where the market might be, in say, 30, 60 or 90 days from now, many dealers have been cautious about wholesale purchases, Black Book’s Ricky Beggs pointed out this week.
But he doesn’t believe high prices should necessarily keep dealers from buying what they need.
“As we talked with dealers and auction personnel this past week, it is obvious that there are loads of questions as to the future of the market values,” said Beggs, managing editor at Black Book, during his latest "Beggs on the Used Car Market" video report.
“Many are concerned about purchasing certain models at today’s pricing levels and whether the retail market can support a profitable sale 30 to 60 or to even 90 days out,” he continued.
Beggs added: “We have yet to reach the point where the new-vehicle inventory for the Toyota, Honda and Nissan stores bottoms out. I don’t feel the concerns over the current strong used prices should be holding back the purchase of needed inventory.”
Overall, the wholesale market was largely on the upswing. In fact, positive changes comprised almost three-fifths of the value adjustments Black Book made during the week. This 59-percent proportion points to used-vehicle demand in a supply-tight environment, Beggs said.
“Within the actual adjustments, the demand for ‘clean’ condition vehicles rises above the rest of the market as the ‘clean’ values have been increasing by larger amounts for six of the last eight weeks,” he noted.
Breaking it down by segment, cars are once again leading the pack. Gains were seen in nine of the 10 segments Black Book monitors, with the prestige luxury car segment (down $46) being the sole downturn.
That said, the overall increase slowed down to $28, which is smaller than the changes from each of the previous two weeks.
Leading the charge was the upper midsize car segment (up $58), followed by entry sporty cars (up $56).
Conversely, Beggs noted that, “It was almost an opposing mirror view for the truck segments this past week as compared to the cars, with 10 of the 14 truck segments declining in value.”
Minivans were back on the upswing this week (up $23) as family vacation season revs up.
Topping the list, though, for trucks was the compact SUV segment (increasing $54) with compact crossovers (up $42) showing the second-highest increase.
Compact pickups were also a positive mover again, having climbed $6 after two downturns in a row.
On the downside, Beggs pointed out midsize SUVs (down $74) and full-size SUVs (down $65), noting these are “probably being pushed down as the concerns about the price of gas continue to be on the forefront.”
Offering some overall wholesale commentary, Beggs said from examining auctions throughout the nation each week, the company has spotted variances that possibly suggest a softer auction environment in some places with solid floors from many remarketers leading dealers to shy away from pursuing inventory.
“At other auctions during the same period, the market seems to continue to climb with consistent and aggressive bidding,” Beggs added. “With some reports coming in that retail is tailing off, seeing a few more ‘no sales’ is of little surprise.”