Used-Vehicle Value Softening Continues

July 16, 2012
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GAINESVILLE, GA - Even though auction activity increased week over week, there were some interesting changes within the market values for the week, according to Black Book. The softening in values continues as only 11 percent of all adjustments were increases to the previously published value, very similar to the week ending June 8 and even less than the 18-percent level of one year ago.

BEGGS
BEGGS

"Plenty of adjustments were made throughout the week. As a matter of fact the average daily adjustment level of 3,080 per day was the second-highest level in at least the past year behind the week ending January 13, 2012 when the record of 3,283 per day was established," according to Ricky Beggs, VP and managing editor for Black Book. "Only one other week have we broken the 3,000-plus level, and that was the 3,035 per day for the week ending May 18, 2012. During the record setting week in January the percentage of increases was a significant 56 percent and a pretty solid 36 percent during the week when the 3,035 daily changes occurred."

As Black Book looks at the segment changes, the -$51 average segment change in the cars was the largest decline since the week ending February 3, 2012. This past week’s change was more than 2.5 times the year ago level of -$20. The most recent five-week average change of -$42 was last surpassed by the -$55 five-week average during the final week of November and the end of calendar year 2011.

"Another interesting level of change was within all 10 car segments, the -$24 for the Entry Sporty Cars (ESC) was the smallest change and on the other end of the change level the largest weekly decline was the Premium Sporty Cars (PSC) at -$78. This end of the spectrum was followed by the -$77 for the Entry Mid-size Cars (EMC)," according to Beggs.

The 14 truck segments were just as soft as the average segment change of -$58 was the second highest level of decline since the week ending September 23, 2011. The largest segment adjustment was -$99 within the Full-size Crossovers (FXU). The other extreme was the lowest amount of change at -$28 for the Compact Pickups (CPT). To better understand the level of current changes and softness in the market one only has to look at the most recent five-week average change within the trucks. At the -$55 5 week average the next closest five-week average was last fall during the seasonal adjustment period at -$49 for the weeks of August 26 through September 23, 2011.

"One other interesting change we recorded this past week was the increase in gas prices. A change of +$0.05 week over week is the first increase for the past 15 weeks back to the week of March 26. Even with the increase we are still $0.23 less than the price at the pump one year ago," Beggs said.

According to Black Book, The bottom line is a slight increase in used-vehicle supply in the wholesale market from the continuously increasing new-car sales levels, along with the current seasonal adjustments which are a reflection of making room for another model year to come into the market, and the change level is more realistic, understandable and expected rather than a level of surprise and reaction of “what’s going on here.”

View the video transcription of this weeks "Beggs on the Market" below: 

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