Heat Wave & Weather Impacts Auctions

GAINESVILLE, GA - According to several of the market summary reports from the Black Book survey personnel, the current heat wave is being blamed, or credited, with the continuing softer market values for the auto sector of the market.

"One of the pieces of information we capture from each market report is the weather conditions," said Ricky Beggs, VP and managing editor for Black Book in his weekly Beggs on the Market Report. "Most of the time this is to know if it was raining or there was snow and ice."

One might ask, “Why would rainy weather affect the market values?” According to Beggs, "Have you ever tried to confirm the quality of the paint on a wet car? And, if you are not positive about the inspection and quality level, you will definitely allow for that uncertainty in your bid level. This is only one of those items that are not available in the commercial electronic data feeds that we do capture with the Black Book physical presence and auction coverage."

As Black Book compiled the data and made the resulting value adjustments, whether it is weather related or not, gas related or not, the market continues to move to a different level.

"Even though the overall market continues to move down at increasing dollar and percentage levels, the number of adjustments at 1941 per day throughout the week was the third-lowest amount over the past 11 weeks," Beggs noted. "The average price change of -$63 for the cars and -$78 for the trucks were the highest level declines in all of the 2012 calendar year. The last time the cars adjusted this much for a weekly period was the week ending October 28, 2011, at -$75. One year ago the cars represented a stronger and more stable market declining by only -$25."

Trucks, at -$78 for the past week, were the largest adjustment over the past year, according to Black Book. The most recent two-week average change of -$68 is most comparable to the 2 week adjustments for the weeks ending September 9 & 16, 2011 at -$66.

Generally, the overall average change will have about half of the segment types adjust more and the other half adjust less. This past week, within the car segments, only three were larger adjustments and all of these were significantly larger amounts. The Premium Sporty Cars (PSC) led the way at -$125. The other 2 were the Luxury Level Cars (LLC) at -$98 and the Entry Mid-size Cars at -$95. The next highest declining segment was the Compact Cars (SCC) at -$62. The smallest declining segment for the week was the -$31 for the Entry Level Cars (ELC).

"One year ago, the car segment adjustments were representative of a more stable market with an overall change level of -$25," Beggs said. "There was one segment back then that was an increasing change of +3. This was the Premium Sporty Cars, the same segment that had the greatest change this past week."

Trucks had the highest average change of any point in the past year. All three crossover segment types, along with the Luxury SUVs (LSU), declined by over $100. The smallest declining segment was the -$21 with the Mid-size Pickups (MPT). Overall we have had a pretty consistent declining truck market. Five of the past six weeks the average segment change has been over -$54, for a six-week average change just over -$59. Last year, at this point in the year the average change was -$55 and of the four segments that were $100-plus declining levels this past week, three of those were $100+ declines a year ago, the Mid-size Crossovers (MXU), the Full-size Crossovers (FXU) and the Luxury SUVs (LSU).

"What could we expect going forward, and what do the historical trends tell us?" Beggs questioned. "The past seven weeks the average percentage of the adjustments that were increasing has been at 16 percent. One year ago, for the next seven-week period, the average percentage of increasing adjustments was 19 percent."

During that time the average segment change was -$38 for the cars and -$43 for the trucks, significantly less than the changes this past week. "From historical standards we should see softening values at possibly lower levels than the most recent couple of weeks," Beggs said. 

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