Lane watch: Automakers sending more volume to auction
At the beginning of May, new-vehicle inventory was estimated at 2.84 million, which was 51% higher year-over-year and at the highest point since late 2020, according to vAuto Live Market View.
And Black Book is saying that automakers are sending more volume to the wholesale market, too, even as analysts saw an accelerated depreciation rate across all segments, representing the most substantial decline since the middle of December.
Black Book reported on Tuesday that wholesale values softened by 0.71% during the first week of June with the midsize car and midsize crossover/SUV segments experiencing the largest declines, sliding by 1.17% and 1.04%, respectively.
The price decline surfaced even as Black Book indicated in its latest installment of Market Insights that the average auction sales rate came in at 55%, which was up 2% from the previous week.
“First full week of June, the wholesale market is experiencing significant depreciation, with notable declines in both car and truck segments across all reporting categories, a trend not observed in several months,” analysts said in the report. “Midsize cars and midsize crossovers/SUVs experienced the most considerable drops in the wholesale market, with declines just over 1%.
“Auction conversion rates increased last week, compared to the previous week. Simultaneously, we are also seeing rising inventory levels at auction last week marking the third consecutive week of rising inventory,” Black Book continued. “The growth in inventory in the OEM lanes contributed to this increase, while inventory in dealer lanes declined.”
Perhaps reflecting that push by automakers, Black Book noticed values for cars up to 2 years old softened by 0.53% last week. That level is more than double the drop experienced by cars 8 to 16 years old — what might be filling the dealer consignment lanes — as analysts reported prices for those specific units decreased by 0.27%.
A similar scenario unfolded in the truck department.
Black Book said prices for trucks up to 2 years old declined 0.54% on average, while values for the 8- to 16-year-old units decreased by 0.29% on average a week ago.
Elsewhere in the car world, Black Book pointed out the 1.17% value decline for midsize cars marked a significant jump week-over-week since prices for those vehicles softened 0.33%.
Also of note, analysts mentioned subcompact and compact cars accelerated their depreciation to 0.95% and 0.90%, respectively. Prices for subcompact cars now have dropped for nine straight weeks, according to Black Book tracking.
Even values for sporty cars and premium sporty cars depreciated last week, sliding 0.21% and 0.23%, respectively, based on Black Book data that was assembled on a volume-weighted basis.
A couple of truck tidbits from Black Book included the sub-compact luxury crossover segment posted an accelerated rate of depreciation, declining by 0.79% compared to a 0.21% drop the prior week. Additionally, prices for midsize luxury crossovers/SUVs declined by 0.64%, a substantial increase from the 0.22% decrease that Black Book observed during the preceding week.
“As always, our team of analysts are focused on keeping their eyes on the market for developing trends and gathering insight,” Black Book said.