Cars, especially luxury models, have seen their residual values slip since the spring as dealers buying at auctions have been paying more for trucks in auction lanes to meet demand for larger vehicles driven by lower fuel prices.
The Carolina Auto Auction has been able to move entry-luxury models from North Carolina, South Carolina, Georgia and Tennessee. However, the auction has seen a gradual decline on overall retentions over the past six months, said Joe LeMonds, the auction's national remarketing manager.
Used vehicle volumes slipped in August nationally, and depreciation accelerated, Black Book has reported. Late-model vehicles from 2016 and 2015 softened in the month in the eight lanes at the Carolina Auto Auction, but trucks remained strong sellers, LeMonds said.
"Trucks took a slight dip, but they stayed fairly consistent and strong," LeMonds said.
The auction has seen an increase in mid-size sedans and utility and cargo vehicles from fleet management consignors in the past two months.
LeMonds saw his wholesale volume reach about 50-50 in institutional consigned cars and dealer consigned cars, and he's seeing an increase in former fleet vehicles. On the fleet side, he sells about 40% of vehicles consigned from fleet management companies. The remaining are bank repossessions and rental fleet vehicles.
Since June 1, the volume of former rental vehicles has slowed due to federal recall legislation known as the Safe Rental Car Act that went into effect requiring rental companies to make sure their vehicles are free of open recalls before renting them to customers.
"The volume hasn't picked back up, but I'm anticipating them selling more cars later in the year," LeMonds said.
Further south, the luxury car malaise hasn't been a factor. The South Florida Auto Auction, which sees 95% of its cars coming from franchised dealers, has seen steady sales of luxury models, said Joaquin Muvdi, general manager. The remaining 5% are off-lease commercial fleet vehicles.
The auction sees about 200 cars per week from the Vista South Motors Group that includes mostly BMWs. The auction has built relationships with Aston Martin, Porsche, and Lamborghini dealerships in the area.
"Getting the right buyers every week into your auction is a big part of the market, buyers who can afford to buy those models," said Muvdi. "Those units are needed for their lots, so they're very specific about what they're buying. What the dealer wants most is to buy a car that's a franchise dealer trade-in."
Editor's note: This is part of an ongoing series that goes beyond the numbers to provide a snapshot of market conditions in the vehicle remarketing industry in the Northeast, Southeast, Midwest, Southwest, Rocky Mountain and Pacific regions. The Southeast includes Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia.