Lane watch: Spring-market momentum continues to fade
Perhaps the bartender hasn’t yet made the last call, but the spring market might soon be hitting closing time.
Black Book reported on Tuesday that wholesale prices moved only 0.14% higher last week. While that’s on par with what analysts noticed during the same week in 2017 to 2019, the movement is 10 basis points lower than what they spotted a week earlier.
“The overall market is still experiencing growth,” Black Book said in its newest installment of Market Insights. “Yet there is a noticeable deceleration in the pace of these gains, and a growing number of segments are beginning to see a reversal into negative trends.
“Notably, the luxury segments have exhibited a widespread downturn across all categories last week, with the sub-compact luxury crossover segment standing out as the sole exception to this declining trend,” analysts continued in the report.
Maybe reflecting consumer demand for affordability and value, Black Book watched wholesale prices on a volume-weighted basis in the car space rise at a much greater clip than the overall market. Analysts said car prices increased 0.27% last week after rising 0.26% a week earlier.
Delving deeper, Black Book said prices for cars up to 2 years old climbed 0.25%, while values for cars 8- to 16-years-old ticked up 0.18%.
Only four of nine car segments generated price increases last week, according to Black Book tracking. But three of those segments made notable moves higher.
Perhaps again pointing to the need for a transportation solution that won’t break the family bank, Black Book noticed values for compact and midsize cars increased 0.51% and 0.55%, respectively.
And maybe with some future buyers ready for summer fun, analysts indicated values for sporty cars now have risen for three consecutive weeks, with the latest increase being 0.48%. Black Book calculated the average weekly price rise for sporty cars during this stretch is 0.44%.
Also of note, analysts said, “the older luxury car categories, specifically those within the 8-to-16-year age range, sustained their upward momentum with continued gains.”
Turning to the truck department, that’s where an even more noticeable deceleration in value rises is happening. Black Book said its volume-weighted data revealed an overall truck price increase of just 0.09% last week.
A week earlier, truck values rose 0.23%, according to Black Book.
In fact, analysts said trucks 8- to 16-years-old decreased by 0.03% on average. It’s the first time that has happened in five weeks.
Black Book indicated eight of the 13 truck segments posted price increases last week. The readings on either side of spectrum showed how the wholesale market can be difficult to read, especially amid the spring market.
Analysts said values for full-size vans slid another 1.47% last week. That’s coming off the prior week’s decrease of 1.07%. Black Book said these workhorses have lost 1.10% of their value on average during the past three weeks.
Conversely, the full-size crossover/SUV category remains strong in Black Book’s value tracking with those units generating another 0.65% increase in value.
“Over a span of six weeks, this segment has seen a consistent upward trend, averaging a weekly increase of 0.47%,” analysts said.
Black Book acknowledged that while this year’s spring market party might be winding down, sometimes the most eventful things happen just before the bartender announces closing time.
“As we conclude the second week of April, the wholesale market maintains a rising trajectory,” analysts said. “Full-size vans, for the third consecutive week, have experienced greater depreciation than what has been observed in recent years. The influx of full-size vans re-entering the market and a growth in new inventory might sustain this downward trend. It is also important to mention that compact vans have seen a drop in value, signifying their first decline in the past month.
“Auction conversion rates this week hit an annual high of 59%, marking an increase of 3% from the previous week,” Black Book went on to say. “As always, our team of analysts are focused on keeping their eye on the market for developing trends and gathering insight.”
Cheers everyone!