BLACK BOOK – Black Book recently published an update to our Weekly Market Update:

Wholesale Prices, Week Ending February 6th

Wholesale prices continued to gain strength last week in what is beginning to look like an early start to the Spring market. The largest gains were in the Car segments, but the majority of the Truck segments also saw week–over–week increases. 

                                         This Week      Last Week      2017-2019 Average (Same Week) 

Car segments                       +0.23%.         +0.23%                    –0.32% 

Truck & SUV segments      +0.09%          +0.00%                     –0.40% 

Market                                 +0.14%          +0.08%                      -0.37% 

Car Segments

  • Compact Cars increased for a third week in a row with this past week being the largest of those increases at 0.77%, compared to 0.23% the week prior.
  • Sporty Cars, both mainstream and Premium, continued to show signs of Spring with another week of gains. The Sporty Car segment increased the rate of appreciation to 0.48%, compared to 0.35% the week prior. Premium Sporty Cars saw a slowing in the rate of increase to only 0.07% this past week.
  • Prestige Luxury Car reversed direction last week and saw a gain of 0.22% after twenty-two weeks of declines.

Truck Segments

  • All of the Van and Pickup segments, both Full-Size and Compact/Small, increased this past week. Full-Size Vans are showing considerable strength as the volume in the segment remains low.
  • The Full-Size Pickup segment continues to gain strength each week, with the rate of growth increasing to 0.30% this past week, compared to 0.09% the prior week.
  • The mainstream crossover segments, Sub-Compact and Compact, are showing consistent week-over-week gains as this price point fits well into the traditional Spring market demand.

Weekly Wholesale Index

2020 ended with used wholesale prices at elevated levels. With economic patterns (including the automotive market) driven by the pandemic, normal seasonal patterns (e.g. 2019 calendar year) in the wholesale market were not observed for most of the year. We saw a similar picture in 2009, at the end of the Great Recession. The question still remains whether we will go back to normal seasonality in 2021. So far, Spring market arrived about 7 weeks earlier than during a typical pre-COVID year.

Retail (Used and New) Insights

  • After much anticipation, the redesigned model year 2022 Nissan Frontier and Pathfinder were unveiled last week. Look for these redesigned models to come loaded with safety and technology features and expect to see them in showrooms this summer.
  • The news of the global microchip shortage’s impact on the automotive industry continues to cause problems for OEMs.
    • Ford announced the reduction in shifts from three to one at two of their US based plants for three weeks. These plants are responsible for producing Ford’s high-volume F150
    • Stellantis is shuttering their minivan production in Ontario for three weeks, impacting the Chrysler Pacifica, Grand Caravan and Voyager models.
    • General Motors announced the production stoppage at four of their assembly plants for one week. Their strategy is to prioritize chip allocation to their highest-profit models, full-size trucks, SUVs, and the Corvette.
  • A majority of the OEMs are now reporting their sales quarterly, but the few that are reporting monthly give us a snapshot into the start of 2021. Ford and Honda both had tough months, down -8.6% and -9.3% respectively, compared to January 2020. For Ford, the declines were mostly due to reduced fleet sales. Hyundai/Kia, Mazda, and Volvo all showed gains over January 2020 with Volvo being up the most at 32.4%.

Used Retail Prices

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down leading up to the December holidays, and thus resulted in declining retail asking prices over the last several weeks of 2020. As demand rebounded in January, retail prices seemed to lag wholesale prices – retail asking prices continued to decline throughout January. This analysis is based on approximately two million vehicles listed for sale on US dealer lots.

Volume

Used Retail

Used retail listing volume stayed essentially flat since the beginning of the year but remains at levels above where the industry was in January, during the pre-COVID time of 2019.

Days-to-turn have been increasing since November and is approaching historic average level.

Wholesale

  • After a small dip two weeks ago in sales rates due to sellers’ firmness on floors, the buyers returned to the buying last week and stepped up to the higher prices. The bidding activity was strong with the only exception being in the Northeastern region where weather appeared to slow the demand. The West coast also continues to be slower to show strength as the stricter restrictions in that region are slowing the rebound in demand that is being seen in other parts of the country.

  • We are hearing more each week in the market about reduced inventory in the pipeline for Q1.With new car manufacturing facing supply chain struggles due to the microchip shortage, as well as a possible additional round of stimulus, the expectation is that pricing will remain strong throughout Q1 and into Q2.
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