GAINESVILLE, GA – As industry reports come in regarding recent monthly new car sales trends, the used-vehicle market continues to be a strong indicator of the current economic conditions throughout the country, according to Ricky Beggs, VP and managing editor for Black Book.
A used vehicle continues to be the preferred means of transportation over a new model due to the lower purchase price and shorter loan terms as compared to a new vehicle, stated Beggs. The differences in monthly payments between new and used vehicles are not as widespread as they were 2-3 years ago.
Used-vehicle values continue to be relatively strong in retention based on historical levels, although that strength has eased somewhat in the past month, noted Beggs. During the month of June the market required an average of 5,637 adjustments per week with the price of both cars and trucks falling an average of $65. “Looking back two months to the market results during the month of May, the average car price went up $138 while the trucks increased by $64 from May 1 to May 31,” said Beggs.
“When comparing the monthly trends of 3 year-old used vehicles, we are now seeing year over year, three month, and monthly value trends with less strength,” said Beggs. “July 1, 2010 as compared to July 1, 2009 for these same 2008 models, shows only one segment type —mid-size pickups — increasing year-over-year.”
Over the most recent three month period, Black Book reports the market is still pretty strong with eight of the 24 segments tracked increasing in value. However, for the most recent period from June 1 to July 1, only three segments — full-size wagons, compact pickups, and mid-size pickups — increased. “Compare this to the May 1 to June 1 period where we reported 13 segment types had increased in value,” said Beggs.
When comparing 2007 models, only three segment types increased year-over-year — mid-size pickups, min-van wagons, and compact sport/utilities. The prior three-month trend was pretty strong with 12 segments increasing over the period, according to Black Book.
“The most recent monthly period shows an overall downward slide in the market with only the full-size pickups, full-size wagons, and compact pickups showing increases in value. During the prior month from May 1-June 1, 17 of the 24 segments had increased values,” said Beggs.
Taking a continued look at older vehicles, 2006 models are showing a bit more strength in the market with these slightly lower priced vehicles, according to Black Book. “This is a sign of the economy indicating consumers just don’t want to spend as much for longer periods of time for later model used and new vehicles as during stronger economic conditions,” said Beggs.
The 2006 models, year-over-year, have six segments up. Thirteen segments increased for the most recent three-month period and the most recent monthly reporting period had four segments increasing. Those included compact crossovers, full-size wagons, compact pickups, and full-size pickups.
“The bottom line, as we see the market adjust on a daily basis, is the difference from new to slightly used in value. The later models, the used 2009 and 2010 vehicles, are moving in the wholesale channels, but in lower percentages of the overall offerings than other model years. Something else we can’t forget, the market isn’t too bad when we look at traditional market trends for this time of the year. But then again, what is traditional?” asked Beggs.