BLACK BOOK – Specialty Market Insights – 4/22/2021
Motorcycle & Powersports Market Update
“After a brief pause last month, values have started to rise again for the majority of segments we cover. 2020 left Powersports values significantly elevated above historical norms throughout the usually slow winter months. For April, values are up, but not by the same amounts as we saw for most of last year, or that we would see in a typical year coming out of the usually slow winter season.” – Scott Yarbrough, Senior Analyst, Motorcycle & Powersports
March to April Average Segment Change in Value
- Our biggest gainers this month are the Personal Watercraft, up 3.0%, followed closely by the Jet Boats, ATVs, and Cruisers, all up roughly 2.0%. That these segments are showing strength is not surprising, they always perform well this time of year as dealers begin to stock up for the spring selling season, but the modest increases are still noteworthy, coming as they do from the elevated pricing levels currently seen across the industry. Normally these value increases would be higher, but the starting point would have been significantly depressed coming out of the winter market.
- This month, tens of millions of federal stimulus checks hit bank accounts across the country. If last year is any guide, many of those will wind up being used to buy powersports vehicles of one type or another. The combination of warm weather, tax refunds, and the need for “socially distant” recreation for at least a little while longer, is likely to keep prices on an upwards trajectory for the near future, and possibly quite a while longer.
- Snowmobiles are down 0.4% as winter begins to recede. This is the only segment that did not see the record-breaking growth the rest of the industry has experienced over the past year.
Segment Spotlights & Industry News
Street Bike Performance
Looking at the graph below of the performance of the Street Bike segment versus its performance from a year ago shows how COVID has altered the market. Instead of a sharp decline in values followed by a steep rise in the spring, we now have a gradual rise in prices over the winter months that now appears to be edging upwards at a more moderate pace.
ATV & Utility Vehicle Performance
Much like the Street Bike segment, the ATVs and Utility Vehicles did not see any drop in values during the Winter months, leaving their prices elevated well beyond normal levels as we enter the spring selling season. In this case, values are rising faster than in a “normal” spring. It is notable that the ATVs have kept pace with the Utility Vehicles, as they had been relative underperformers in recent years.
- RumbleOn and RideNow recently announced an agreement to merge the companies to create what they call the first omnichannel customer experience in the Powersports industry by combining a bricks and mortar retailer with an ecommerce company.
- A recent Powersports Business article noted that Yamaha has already sold out many of their 2022 snowmobile models during their Spring Powersurge pre-order program. Additionally, they noted that many Yamaha dealers have sold most of their non-current sled inventory and many recent sales were to first time buyers.
- May is the traditional start of the riding season across most of the U.S., and the Motorcycle Safety Foundation (MSF) and the Motorcycle Industry Council (MIC), in concert with the ATV Safety Institute, have declared May “Motorcycle Safety Awareness Month” and “ATV Safety Week” is May 15 through May 23, with selected training sites nationwide offering free ATV safety courses.
Recreational Vehicles Market Update
“The values of used RVs sold at wholesale auctions rose across the board last month. This is the time of year we usually expect prices to start rising as dealers begin actively restocking their lots to be ready when their first customers start to arrive. Given the current popularity of RVs, the Spring surge is more pronounced than usual, leading to all-time record prices in each of the segments we track.” – Eric Lawrence, Principal Analyst, Specialty Markets
Wholesale RV Values Reach All Time Highs
For Motorhomes (including Class A, B, and C)
- Average selling price was $62,967, up $3,875 (6.5%) from the previous month.
- One year ago, the average selling price was $47,454.
- Auction volume was up 19.2% from the previous month.
- The average model year was 2009.
For Towables (including Travel Trailers and Fifth Wheels)
- Average selling price was $21,821, up $1,450 (7.1%) from the previous month.
- One year ago, the average selling price was $14,834.
- Auction volume was up 9.1% from the previous month.
- The average model year was 2015.
According to the RVIA, the total number of RVs shipped in February reached 48,286, a record for the month, and an increase of 30.1% over February 2020. Towables totaled 43,482 units and motorhomes accounted for 4,804. Park Model RVs rose 16.6% year over year to 373 units, which was also an increase of 12.6% over January’s totals.
- Lippert Components, a major RV parts supplier, announced that their first quarter 2021 sales reached $1.0 billion.
- California Campers, a luxury RV rental company, reported that rentals were up 143% last year over prior year.
- Camping World announced their newest SuperCenter in Eau Claire, Wisconsin. They also announced that they have acquired their first dealership in West Virginia, Trailer City RV.
- Statistical Surveys reported that 35,032 RVs were registered in February, an increase of 17.7% year over year.
- Camping World is expected to report sales of $1.27 billion for the current fiscal quarter, 23.3% higher than last year.
- Heartland RVs has announced the expansion of their Toy Hauler manufacturing plant.
- The RVDA and Baird announced the results of a survey showing that RV dealer sentiment was very high in March, with a score of 81. Their three-to-five-year outlook was not quite as optimistic, coming in at 64. (Score is out of 100, anything over 50 is considered positive.)
Collectible Cars Market Update
“As we head into the summer months and more and more people are getting vaccinated, we are starting to see a return to normalcy in the collectible car world. Many of the auctions, car shows, rallies, and other events that were postponed or canceled are returning as “in person” events and are well attended and seemingly very successful. We’re all looking forward to the Amelia Island Concours and associated events in mid-May.” – Eric Lawrence, Principal Analyst, Specialty Markets
- RM Sotheby’s recently closed their Online Only: Open Roads, March auction with a sell through rate of 72% and sales totals of €1.82 million, $3.1 million, and £84,000 in the various regions in which the auction was conducted. RM noted that bidders hailed from 32 separate countries and both sale days saw more than 2,700 bids placed on their auction platform.
- Bonhams’ Les Grandes Marques du Monde auction was recently held in Paris, their first ever digital only auction. Sales totals reached €4 million (roughly $4.75 million) and buyers from 37 countries placed bids. Bonham’s MPH Division recently concluded their first auction of the year at the Bicester Heritage site in England, finishing with an 83% sell through ratio.
- Barrett-Jackson was finally able to hold their 50th anniversary sale that been postponed from January. The auction was very successful, with sales totals exceeding $95 million (not including those sold for charity) and over 1,000 vehicles changing hands. Historic automobilia brought in over $4.4 million and $5.8 million was raised for charity, including $2.5 million for VIN 001 of the new all electric 2022 GMC Hummer EV Edition and $1 million for VIN 001 of the reintroduced 2021 Ford Bronco.
- Mecum had a busy month, with three auctions totaling $71.4 million. Their Glendale, Arizona sale, was the biggest of the three, with $42.3 million in total sales and a sell-through rate of 86% (712 of 829). Gone Farmin’ is primarily an antique tractor and farm implement sale but offers a fair amount of vintage pickups and work trucks as well. Total sales came in at $8.4 million, a 68% increase over last year. On the subject of increases, their Houston sale saw total sales reach $21 million, up 43% from 2020 on the strength of an 86% sell through. Capitalizing on the current RV craze, two of the top five sales were late model custom Mercedes-Benz Class B camper vans.
Notable Recent Auction Sales Include:
- 1966 Shelby Cobra 427 Super Snake $5,500,000 (Barrett-Jackson)
- 1967 Ferrari 275 GTB/4 $2,475,000 (Barrett-Jackson)
- 1967 Chevrolet Corvette 427 L88 Coupe $2,695,000 (Mecum Glendale)
- 2016 Ferrari F12tdf Coupe $880,000 (Mecum Glendale)
- 2009 Mercedes-Benz SLR McLaren Roadster $434,500 (RM Sotheby’s)
- 2015 Ferrari 458 Speciale A Roadster $500,500 (RM Sotheby’s)
- 2019 Chevrolet Corvette ZR1 Convertible $165,000 (Mecum Houston)
- 2018 Dodge Demon Coupe $143,000 (Mecum Houston)
- 1963 Chevrolet Corvair Rampside Pickup $49,500 (Mecum Gone Farmin’)
- 1957 Dodge Power Wagon Pickup $45,000 (Mecum Gone Farmin’)
The Vintage Exotic segment focuses on high dollar European exotic sports cars produced from the late 1950s up through the mid-1970s. This is without a doubt the top of the market. This segment includes Ferrari 250s, 275s, and 365s, Lamborghini Miuras, Maserati Ghiblis, Mercedes-Benz Gullwings, Porsche Speedsters, and coach-built Bentleys and Rolls-Royces. Although most owners of these vehicles are very wealthy individuals, the market is very volatile and fluctuates quite a bit as it falls in and out of favor, sometimes being seen as a safe haven in which to park money and other times as an unreasonable extravagance. Values have been fairly stable for several years, with some individual models generating more interest than others.
The changes by vehicle segment type were mixed this past year. While Muscle Cars, Pony Cars, Exotics, and Classic Pickups and SUVs increased, American Classics and European Sports Cars declined. As the demographics within the collectible car community continue to evolve over time, we are seeing tastes shift as older owners continue to age out of the hobby and be replaced with younger ones.
Medium and Heavy-Duty Market Update
Commercial Truck Market Update
“Supply chain issues continue to increase the values of commercial trucks and trailers. Despite weaker conditions and higher mileage, week after week we continue to see increasing auction, upstream, and retail transaction prices for Medium and Heavy-Duty trucks. There are simply not enough trucks, nor drivers, in the market to keep up with demand. Shipping yards are backed up, causing a shortage of shipping containers around the world. Microchip and tire scarcity continue to impact the transportation sector. Farmers are having a difficult time finding certain fertilizers as logistics companies focus on more profitable freight as equipment and driver shortages continue. Landscape and construction companies are having difficulties acquiring enough dump trucks and are having to use dump trailers to help complete jobs in time. Commercial equipment is in high demand and transaction prices are reflecting that on both the wholesale and retail side.” – Josh Giles, Principal Automotive Analyst, Vehicle Valuations & Residuals
- The chart above shows the quarterly adjustments for each segment within Heavy Duty.
- We are seeing continued strength in all segments, but especially Regional and Over the Road tractors.
- Heavy-Duty Construction units remain stable; however, we have not seen as much of an increase in this segment compared to road tractors and medium duty trucks.
- Continued improvements in freight demand mixed with limited inventory on new and used trucks continue to be the driving forces behind the price increases.
- Fleets are negotiating to keep their units in service longer than originally planned due to production delays.
- The chart above illustrates the quarterly adjustments to Medium Duty trucks.
- We continue to see price increases in all Medium Duty truck classes thanks to production slowdowns.
- Last mile delivery services continue to thrive and are projected to increase over the next couple of years. This is helping increase the demand for most Medium-Duty trucks.
- Dry vans and box trucks have grown in demand as production delays continue to limit the number of new trucks being delivered.
- Due to the production delays, fleets are keeping their units in service longer, which equates to higher mileage, and worse condition units being sold at auction.
Commercial Trailer Market Update
- Commercial Trailer values have been on an upward trend since August of 2020 due to production shortages and strong freight demand.
- Since the beginning of the year Dry Vans have increased in value by 16.1%, Refrigerated Vans have increased 8.4%, Lowboys have increased 3.2%, and Dump Trailers have increased 2.8%.
- These numbers are amazing when you consider by this time last year Dry Vans had depreciated 9.0%, Refrigerated Vans were down 13.1%, Lowboys were down 2.7%, and Dump Trailers had depreciated 9.1%.
- Recent auction and retail sales figures indicate that this market will continue on an upward trend through the remainder of this calendar year as commercial trailer production slowdowns continue, and freight demand grows.
Retail Sales and Freight Demand
- According to data gathered from the Federal Reserve Economic Data (FRED), new retail sales increased 6.8% from February to March.
- This is a positive sign for the commercial market as demand has outpaced supply for almost a year.
- Retail sales numbers should level off a bit as the supply chain issues continue.
- Supply chain issues are having a large impact on the commercial market. Not only do OEMs need microchips, tires, seat foam, and different metals/materials to build commercial trucks and trailers, they are also responsible for delivering these supplies from one place to another.
- According to the ATA Truck Tonnage Index, freight has taken a bit of a dive due to equipment and driver shortages, however the numbers remain strong compared to the past 14 years.
- We expect freight to continue an upward trend as soon as supply chains are restored and production returns to a more normal output.
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