Photo via Wikipedia.

Photo via Wikipedia.

A higher portion of pricier off-lease units made their way onto the market in September, along with higher truck prices, which resulted in a flat wholesale market for the month in the Southwest region.

Certified pre-owned (CPO) sales were also down in the month of September, according to ADESA Analytical Services.

Arizona's Dealers Auto Auction Southwest (DAASW) in Phoenix saw vehicle sales drop slightly in September due to an oversaturation of off-lease and rental vehicles affecting the wholesale market, said Stephanie Gingras, general manager.

Sellers did not go against their reserve price to adjust to the oversaturated market, which resulted in the auction’s average of 700 vehicles sold a week to drop slightly to 650 a week, Gingras said. The auction, which has six lanes, sells vehicles at an average wholesale price of $4,000 to $5,000. The auction's mix of vehicles averages 120,000 miles and about eight years old.

Even though the auction deals mostly with sub-prime lenders, buy-here-pay-here sellers, and local used-car franchises, the oversaturation of the wholesale market in the Metro Phoenix area results in an abundance of vehicles at other local auctions.

DAASW has seen a climb in the amount of cars and a decline in trucks run through the lanes.

“Our surrounding states use trucks a lot — Texas, Wyoming, Utah, and Colorado — and trucks are hard to find because people keep them as work trucks around here, and they’re just hard to find," said Gingras. "It’s a hot commodity. When they do come across the block, they do bring a lot of money."

Echoing the importance of trucks in the southwest, Paula McKinney, sales manager at Texas Lone Star Auto Auction (TLSAA), said that despite a drop in sales at her auction, trucks remained a top seller, with full-size trucks leading the segment. Full-size trucks were also the most consigned vehicle at the auction, followed by mid-size cars, and mid-size SUVs.

McKinney said the auction's average conversion rate of 70% dropped to 61% or 62% in September, and she also attributed the drop to sellers not going against their reserve price.

“There wasn’t one particular model where the sales had dropped," McKinney said. "It was across the board."

McKinney said the drop had affected the sale of mid-size cars the most in September. Vehicles from the 2005 to 2010 model years performed the best during the month. TSLAA specializes in the franchised dealership market, and also sells vehicles consigned from banks and credit unions.

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 Southwest region includes Arizona, New Mexico, Oklahoma, and Texas.

About the author
Andy Lundin

Andy Lundin

Former Senior Editor

Andy Lundin was a senior editor on Automotive Fleet, Fleet Financials, and Green Fleet.

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