Beggs: ‘Normal’ Doesn’t Describe Close of 2012 Wholesale Market

Along with offering his thoughts on what this year might hold, Black Book’s Ricky Beggs didn’t use the term “normal” to describe the closing of 2012.

In his first online video analysis of 2013, Beggs told dealers that “throughout these party-filled holidays and a couple of slightly shortened work weeks, I must tell you that from our auction attendance at both physical and online auctions, the facts presented by the data we have recently received and the comments from the dealers we have talked with recently, the market would not be described as normal in relation to the December activity of the past few years."

In continuing his commentary contained in the latest episode of “Beggs on the Used Car Market,” the managing editor highlighted trends that’s been going for the past six weeks.

“The percentage of adjustments requiring raises to the most recent published values has been at levels we have only seen after the calendar has turned to the first quarter of a fresh year,” Beggs said. “The initial push of strength we believe was a result of additional vehicles needed to replace many of those damaged during Hurricane Sandy.

“The most recent strength has to be the overall pent-up demand bringing forward an early spring market,” he continued. “Consumers have put off buying their next new or used car as long as they can or at least want to. Their current car is old and consumers want to move forward now that the election issues are behind us with only the fiscal cliff still hanging over our heads.”

During the past six weeks, Black Book found the increases amounted from a low of 31 percent of the adjustments to a solid 50 percent this past week for a 39-percent average during this period.

Looking next at specific vehicle segments, editors found that the average truck segment price change produced a $5 gain, fueled by the strength of full-size vans. Among the units, passenger versions moved up $74 while cargo models jumped by $56.

While not to the vans’ level, Black Book discovered several other truck segments posted price climbs last week, including full-size pickups (up $5), compact pickups (up $3) and compact crossovers (up $3).

Meanwhile on the car-segment side, overall prices slid $37, the smallest average decline during the past five weeks and the second smallest decline since the week ending June 15.

Even with the national average gas prices at the pump at $3.26, only 1 cent above the low point of the last year, editors noticed the three smallest cars in physical size that offer the most fuel efficiency also boast the most stable values within the car segments. Black Book found entry level cars softened by just $1 while compact cars (down $5) and entry midsize cars (down $6) didn’t drop by much.

“The better equipped entry type cars are helping make these segments more enticing as consumers are not having to give up all the creature comforts with today’s smaller vehicles,” Beggs said.

Beggs wrapped up his latest analysis by looking ahead.

“If history is an indicator, the market should continue to show stability and maybe even a little strength,” he said. “The past four weeks during December with positive changes averaging 40 percent, almost one year ago during January 2012, the four-week positive changes averaged 48 percent.”

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NADA UCG: Wholesale Prices Remain Solid, Effects of Rising Gas Prices Evident

In the first installment of exclusive AuctionNet Wholesale Price and Forecast Data provided by NADA Used Car Guide to Auto Remarketing, wholesale prices remain consistent, but the effect of rising gas prices is “undeniably evident,” the organization stressed.

And some segments, though not normally thought of as gas sippers, are also benefiting from the spring season.

Mid-size vans continue to “benefit not only from lift normally associated with the spring selling season, but also from an ongoing reduction in supply and the versatility (capacity and relative fuel economy) the segment has to offer,” NADA Used Car Guide explained.

The two-week average rate of growth in wholesale prices for this segment led all other segments by 3.8 percent, according to the organization’s AuctionNet data.

And NADA UCG expects wholesale prices for this segment to rise by 3 percent, or $475, over the course of this week.

Following closely behind, the rate of growth for compact car and mid-size car segments has made significant jumps, as well, perhaps reflecting the recent climb in gas prices.

The compact car segment wholesale prices jumped 3.7 percent, and the mid-size car segment saw a rise of 3.2 percent.

“Price growth for the current week is  expected to slow somewhat to 2.5 percent for the compact car segment and 1.6 percent for the mid-size car segment,” NADA Used Car Guide further explained.

On the other hand, indicative of the season change and fuel-price trend, large pickup, large SUV and luxury utility prices have fallen behind other segments.

And NADA UCG analysts expect prices for large pickups and luxury utilities to stay relatively flat.

But large SUVs are expected to see more of a change, falling by 2.3 percent, or an average of $600, the organization concluded.

4- and 2-week AuctionNet wholesale average prices are created by collecting all AuctionNet records for vehicles up to five years of age for a specified period of time.  Prices are then adjusted for changes in mileage and mix.

Current week prices are forecasted based on NADA's proprietary used vehicle value model which includes assumptions for new vehicle prices, used vehicle supply, gasoline prices and other economic factors.

Average AuctionNet® Wholesale Price

Editors Note: Auto Remarketing will be receiving these AuctionNet data updates weekly. Keep an eye out for the next installment in your Auto Remarketing Today e-newsletter.

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Beggs: Wholesale Market Is ‘Busting Loose’

The new year already has generated a new record for Black Book’s editors as last week they established a new mark for the most daily adjustments.

Black Book’s staff made a daily average of 3,280 adjustments last week, almost 400 more per day than the previous high set during the week ending Aug. 12.

Thanks to the bevy of activity, managing editor Ricky Beggs acknowledged the conversation within Black Book’s office has changed significantly.

“The water cooler talk that has been often focused on college football for the past four to five months is now over until August or September, and once again, a team from the SEC has been crowned the champion,” Beggs began during his latest video blog, “Beggs on the Used Car Market," referring to college football's Southeastern Conference.

“The champion of the used-car market this week was the fact that 53-percent of the changes the editors made were increases,” he continued. “We haven’t had this level of positive changes since the week ending last May 20.”

While the amount of daily adjustments set a new precedent, Black Book discovered that last week’s overall movement settled at a decline of slightly less than $5.

For comparison, Beggs mentioned that when Black Book previously established its daily adjustments record last August, the overall movement was a decline of $119.

Beggs explained that last week’s overall dip “was definitely supported by the various dealer and auctioneer comments we heard such as ‘expecting an upturn’ and a more enthusiastic ‘on the verge of busting loose within the next two to three weeks.’”

“With slightly more 'average' condition values adjusted than 'clean,' and more of them being increases, this is a reflection of the interest and demand due to the tax season type cars and trucks,” Beggs continued.

Breaking it down by segment, Beggs noted: "For the first time in at least the past 12 weeks we not only have one car segment, but two that increased in price week over week."

Editors found that entry midsize cars ticked up by $1, while the entry level cars increased by $12.

Black Book noticed that three other car segments declined by $22 or less for the week: full-size cars (down $22), compact cars (down $15) and upper midsize cars (down $11).

Turning over to truck segments, Black Book determined that the overall change settled at a decline of $15, a level Beggs said was similar to the past three weeks.

Editors mentioned that compact pickups have increased five of the past six weeks and were also joined a week ago by full-size SUVs, which increased by $9.

Showing the overall stability of the trucks, Black Book indicated that there were six of the 14 segment types that declined by just $7 or less.

Beggs closed his commentary by elaborating how why the wholesale market appears to be heating up.

“As we gathered and analyzed all the market data this week, another sign of the increasingly active market was an increased level of data on quite a few more late model vehicles, those from model years 2010 through 2012,” Beggs shared.

“From this analysis we included market driven data values on an additional 68 vehicle listings. These were a mixture of highline cars, full-size trucks, entry midsize cars as well as compact and midsize crossovers,” he continued.

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RVI: Trucks At Top of Wholesale Gains

Amid a modest uptick in used-vehicle prices from the previous month, December’s wholesale increases were led by gains in the larger vehicle categories, as these segments were ahead of the market curve in the year’s final month thanks largely to more moderate gas prices, according to the RVI Group.

More specifically, the RVI Used Car Price Index was 1.45 in December, up 0.6 percent from November and a 12.5-percent hike from December 2010.

“The primary reason for wholesale values increase continues to be the low supply. Even with new car prices seeing declines, the low supply continues to drive wholesale values higher,” RVI vice president Rene Abdalah told Auto Remarketing on Friday.

Breaking the month down, truck segments accounted for the top five sequential increases and six of the top eight.

The segment showing the heftiest increase from November was the full-size van category, which was up 2.6 percent. It was followed by small pickups (up 1.4 percent) and small SUVs (up 1.4 percent), with full-size pickups (up 1.2 percent) and full-size SUVs (up 1.1 percent) not far behind.

“Larger segments were market leaders in month-over-month increases mainly due to the continued decline of gas prices,” Abdalah explained. “Consumers have found low- to mid-$3/gallon prices the norm and have turned to purchasing larger vehicles.”

On the opposite end of the spectrum, sports cars (down 5.4 percent) showed the heftiest decline with luxury coupes (down 2.9 percent) having the second-highest drop.

On a year-over-year basis, all segments were up in price. The most dramatic increase was for subcompacts, which climbed 25.7 percent. Next up were small pickups (up 19.3 percent) and compacts (up 19.2 percent), respectively. Showing the lightest year-over-year gain was the luxury coupe segment, climbing 1.8 percent.

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