A Clean Car = A Profitable Car

GAINESVILLE, GA - According to Ricky Beggs, vice president and managing editor of Black Book, compared to the past two month, the week following Labor Day was extremely active for remarketed vehicles.

"Over 2,850 vehicles were adjusted on average each day throughout the week. As the week progressed we really had 2 things that primarily stood out. First is that the late model vehicles, with even slightly edgy miles on the odometer, were just not getting any attention. This is a real typical reaction for this time of the year with a new model year of vehicles appearing in the market from every manufacturer. In time this will change, along with more market value adjustment on the used models," according to Beggs. "Second, even though there were plenty of no sales in most lanes, if a truly Clean condition car was crossing the block, the buyers would suddenly appear. As the week ended the actual adjustments that were increases on Average condition came in at 29 percent. It is unusual for the Average and Clean values to differ very much in their trends and adjustments, but this past week the Clean Condition values had 35 percent of the adjustments being increases. I see this as another supporting example of many of the trade-ins at franchised stores being older and with higher miles. Thus the results of Clean values getting more positive attention."

Beggs further noted that, in cars, the average segment change was at a declining level we haven’t seen in over a year. The -$94 average change represents a -0.59 percent change. Over the past two months the segment which has generally seen the largest percentage of depreciation each week is the entry level cars (ELC). But, this changed during the week following Labor Day.

"This past week that segment was the lowest dollar and percentage decline at -$21 or -0.32 percent. This past week also gave us three of the four more luxury type segments that broke the century mark with the prestige luxury cars declining by $206. The premium sporty cars at -$172 have now declined over $100 for three of the past four weeks," according to Beggs. "The luxury level cars (LLC) also broke the -$100 level coming in at -$135. It’s also an interesting note that with this being the largest declining weekly level for cars, that this is also the smallest increase in gas prices, at less than one penny, since the first of July."

The truck segments increased for the first time in 6 weeks. The full-size passenger wagons (FVW) increased by $13. Overall, trucks only dropped by $29, the smallest weekly decline since the week ending June 1, 2012, according to Beggs.

"All through the week the reports we received from the Black Book survey personnel were mostly about the interest in the trucks and utilities," Beggs noted. "And, after all of the data analysis, the final adjustments supported those comments."