GAINESVILLE, GA - What a year in the auto industry! With new car sales levels reaching close to 12.7 million, we still have a long way and a long time to go to reach the old traditional level of 16.0-plus million sales that will put strong used volume in the wholesale arenas, according to Ricky Beggs, VP and managing editor for Black Book.
"If not for the tsunami in Japan last March, multiple storms in the U.S. from hurricanes, tornados, and flooding to go along with the stumbling economy in Europe, on top of consumers who weren't overly excited about spending, we probably would have climbed out of the recession hole with a much higher new car sales level," Beggs commented.
2011 finished on a pretty good note. "In the month with traditionally the least wholesale activity, when looking at used vehicles from two- to six-years-old, the monthly depreciation was only -2 percent, while yearly depreciation was less than half of what many plan for at -7.7 percent," according to Beggs.
The segment types with the most significant depreciation year over year were the Full-size SUVs at -15.4 percent and the Mid-size SUVs at -12.6 percent, both well under the expected 18 percent annual depreciation. There were 7 of 24 segments with less than normal monthly depreciation levels during December, the traditionally weakest period, led by a very minor -0.6 percent for the Compact SUVs and -0.7 percent for the Compact Pickups.
"At this time of the year I get asked quite often what I think will happen in the used car market during the first half of the year," Beggs said.
Black Book expects new car sales levels to continue to climb, hopefully to at least 13.5 million. "This creates another possible 700,000 to 800,000 potential trade-ins," Beggs said. "But, with end-of-term lease return volumes to bottom out this year there will continue to be a tight supply of used vehicles, thus used values will be strong again this year."
Beggs believes the lending part of the industry we feel will be aggressive again in overall approvals of even slightly lower beacon scores, increased advance amounts in relation to actual cash value and longer length of loan terms.
Gas Prices will be another area we will be watching very close. "Even though there are no sources thinking average pump prices will jump higher than $3.85 per gallon, the recent report of an Iran/Iraq shipping access disagreement caused an overnight jump of $0.17 per gallon. Hopefully there won't be much of this type news," Beggs said.