Economic Improvement Starts to Open the Pent-Up Demand for Used Product

May 21, 2012
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GAINESVILLE, GA - It has been an interesting week of auction activity and trending patterns within the market, according to Ricky Beggs, VP and managing editor for Black Book. "The final analysis of the week had us adjusting 2,097 vehicles per day. From these adjustments, we had the smallest percentage of vehicles increasing since the week ending February 24, 2012, a full 12 weeks ago. Of those increases, the average increase of $94 was the second smallest dollar increase since the week ending February 17, which was 13 weeks ago."

(Scroll down to watch this weeks "Beggs on the Market Video.")

Gasoline prices continued to decline, this past week by another $0.04, which makes for a total $0.15 over the past five weeks. "As we looked at the overall changes by segment type, this is the first time since the price per gallon slide began that the trend for trucks and cars week over week reacted as one might normally expect," Beggs said.

BEGGS
BEGGS

"After looking at the comments from the dealers included in the survey personnel reports, overall they fall into place as expected. There were even more comments relating to an increase in the number of 'no sales' and the market being 'slightly off.' An interesting comment from a North Carolina auction indicated the 'dealers’ lanes showed better results.' After talking with several remarketers during the week, many of them are having higher no sales percentages by design. Their backlog of inventory to remarket remains at such low supplies that they don’t see the urge to downwardly adjust their existing floors," Beggs commented. 

According to the weekly Beggs on the Market Report, trucks turned the corner as seven of the 14 segment types increased for the week. The overall average change of -$1 was the smallest decline in the past five weeks. The Full-size Crossovers (FXU) showed the most strength with a $32 increase week over week, now up for three weeks running. The Full-size SUVs (FSU) continued a market trend of strength as they have now increased for 10 consecutive weeks. Somewhat surprising was the amount of decline for the Mid-size Crossovers (MXU) at -$40. The largest percentage change for the week was with the Cargo Minivans at an increase of 0.4 percent.

"Taking a more in-depth look at the car segments, we finished the week at an overall average segment change of -$12 or -0.08 percent. The only increasing segment for the week was the Compact Cars (SCC) at $7. This is a run of 11 weeks of positive adjustments. Two segments that had been on multi positive trending weeks of 4 and 12 weeks respectively were the Entry Level Cars (ELC) at -$9 and the Entry Mid-size Cars (EMC) at only -$2 this past week," Beggs noted.

"Even with the overall declining average amount of the cars and trucks we still see a pretty solid market overall. There are a few more cars coming into the market through the trade-in process, as new car sales continue to increase. This is being offset somewhat as the end of term lease contracts continue to decline and should continue this pattern through the end of December 2012 before starting to increase again after a couple of months into 2013," Beggs said.

Even though the struggling economic news continues to lead the headlines from Europe, Beggs notes that we are starting to see positive signs that the long awaited improvement in most economic venues in the U.S. is opening up the pent-up demand for both new and used product.

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