Midwest: Activity Picks Up Ahead of Tax Season

Challenging winter weather led to a slight year-over-year decline in auction sales through January in the midwest region of the U.S., but sales began to pick up in February, auctions from the region told Vehicle Remarketing.  

“[In] the first two weeks of the year we had high winds and snow on the ground, so we started out slower than last year due to the weather being so challenging,” said Dee Sullivan, fleet lease manager of Minnesota’s Mid-State Auto Auction. “We rallied in the third and fourth sales and ended up a small amount down from last year.”

January and February typically see healthy bidding activity, according to Sullivan. However, the pace really begins to pick up toward the end of February and entering March and April. During this that time of the year, many consumers begin to get their tax returns back and begin looking for used cars.

Mid-State Auto Auction, which typically runs somewhere between 300 and 450 units during a sale, experienced a slight decline in auction activity.

At Wisconsin’s Badger State Auto Auction, General Manager Tim Netz said that both his independent and franchised dealer customers have reported a weak used retail market during the first months of the year. This weak market has translated into “less-than-anticipated action in his lanes,” he said.

Due to the harsher January weather in Minnesota, pickups, SUVs, or anything with four-wheel performed well. Well-equipped full-size sedans like the Chevrolet Impala or Malibu also performed well during the month.

Hybrid vehicles typically perform well in her market due to Minnesota’s icy roads and cold climate, she said. During January, however, she received some high quality units that she knew would perform well if she sought the right buyers.

‘We had some really nice ones that came through, so what we did was we reached out to our buyers in the Chicago area that like to buy that, and they purchased them online,” said Sullivan. “They brought good money but we had to reach out to buyers a little bit farther away to have success with that vehicle.

Badger State Auto Auction, which typically runs over 600 units in a given sale, said that mid-size cars and vans performed well for them. He also noted that trucks have begun to take a downturn in terms of demand at his auction.

In terms of prices at auction, auction prices at Mid-State Auto Auction have been in line with what they normally experience during this time of the year, or slightly higher. Dealers vying for popular inventory in preparation of the upcoming tax season, Sullivan added, has begun to raise the prices on their most popular models.

“Our buyers come to the auction during this time of year really needing to replenish or beef up their inventory due to the increase in demand for purchasing used vehicles because of the tax season. We work very hard at consigning vehicles that are in high demand. This meets the needs of our buyers and the price is driven up so our sellers benefit as well,” said Sullivan.

The first two weeks in February were also down compared to same time last year at Mid-State Auto Auction, however, the second week was up over the first week. And, as February concludes and March arrives, Sullivan expects that week to week increase to continue.  

“[In] the first two weeks in February we were still down a bit from the year before but started to see demand increasing quite a bit from the first sale to the next,” said Sullivan. “We are anticipating a very strong close to February with temps being in the 50's and the demand for tax season cars peaking.”

Netz echoed the sentiments of his dealer customers. The used car market has been weak in the start of the year. However, he too, sees that changing as March approaches.

“Many customers are hanging on for the “tax season.” It will be interesting to see over the next few weeks as where the market ends up,” said Netz.

Editor's note: This is part of an ongoing series that goes beyond the numbers to provide a snapshot of market conditions in the vehicle remarketing industry in the Northeast, Southeast, Midwest, Southwest, Rocky Mountain and Pacific regions. The Midwest region includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.