Panic Buying of Economy Cars Has Gone Away

GAINESVILLE, GA - With gasoline prices settling down even lower this past week, wouldn’t you expect the car values to be a little weaker and the trucks to get a little stronger? This past week saw gas prices drop on a national average by $0.04 with a significant $0.11 decline in the price at the pump from April 2 through April 30. For those of you grabbing the green handle and pumping diesel fuel, it was a meager 1.2 cent decline week over week and $0.07 decline for the month.

But, as the Black Book editors completed their detailed analysis, which resulted in an average of 1,765 vehicles adjusted per day, the average segment change within the cars was a -$8 change for the past week as compared to the -$13 change the prior week. With four of the 10 car segments showing an overall increase, the +$12 change within the Entry Level Cars (ELC) was overpowered by the -$36 and -$26 changes with the Premium Sporty Cars (PSC) and the Prestige Luxury Cars (PLC).

"With gasoline getting more affordable the demand and price of trucks and utilities could easily have improved. But, nothing in this industry is routine, normal, or completely predictable any more," according to Ricky Beggs, VP and managing editor for Black Book. 

The average change for the truck segments of -$15 was the largest declining amount for the past four weeks. With five of the 14 truck segments increasing, the most consistent strength continues to be with the Full-size SUVs (FSU) at +$21, now a positive segment for the past 9 consecutive weeks. The Luxury SUV (LSU) segment declined by $75, which is less of a decline when compared to any of the previous four weeks for that segment.

"We are seeing more of the used 2012 models hitting the wholesale market channels. If this fits into your inventory needs, the market driven values of many 2012s can be found in whatever method you have selected to get your values from Black Book," Beggs said. "However, remember that the 2011s and 2012s represent the most volatile model years. These late model units will initially show up in the market at a strong value and not too far down the road, as more volume hits the lanes, and generally decline the fastest. As one of our Florida survey personnel commented within his report 'the 2011s and 2012s are a tough sell,' " 

According to Black Book, The bottom line is this late model used vehicle is a head to head comparison, and often cross shopped, vehicle to a new model which has some incentive help from various sources.

"As we move solidly into May the aggressiveness is just not there and in many cases, as a dealer from Ohio and another from Wisconsin recently described to us, we are in a very selective market. Touching on fuel prices again, a dealer from Tennessee said 'panic buying of economy cars is gone,' " Beggs noted. 

View this week's "Beggs on the Market Video," below: