BLACK BOOK – Wholesale Prices, Week Ending August 20th

The market has now had four consecutive weeks of large declines, averaging greater than -0.84%. Lower consumer demand has impacted buyer behavior at auctions around the country, but this past week, sellers began to hold firm on floors and the sales rate reflected this change in behavior.

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

Car segments                         -0.87%              -0.90%                    -0.19%

Truck & SUV segments        -0.96%              -0.82%                    -0.21%

Market                                   -0.93%              -0.85%                    -0.21%

Car Segments

  • On a volume-weighted basis, the overall Car segment decreased -0.87%. For reference, the previous week, cars decreased by -0.90%.
  • All nine Car segments decreased last week.
  • The Prestige Luxury Car segment reported the largest rate of decline last week of the nine Car segments, with a decrease of -1.34%, after the prior week’s -2.00%.
  • Compact Cars have now experienced declines for eight consecutive weeks, for an average weekly depreciation of -0.63%. Last week, the segment had a larger than average decrease of 1.22%, the largest single week decline for this segment since the week ending on August 6th, 2021.

Truck / SUV Segments

  • The volume-weighted, overall Truck segment decreased -0.96%, compared to the prior week’s decrease of -0.82%.
  • All thirteen truck segments reported decreases.
  • Fuel prices have been falling but are still higher than this same time last year. Despite the falling fuel prices, the Full-Size SUVs continue to report large week-over-week declines. Full-Size Luxury had the largest decline last week, at -1.87% and Full-Size SUV was not far behind, with a decline of -1.82%.
  • Full-Size Vans are remaining in negative week-over-week territory, but the declines are lowest of all the Truck segments.

Weekly Wholesale Index

Calendar year 2020 and 2021 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 last 2 years. We saw a similar picture in 2009, at the end of the Great Recession. Calendar year 2021 did not have typical seasonality patterns as the market had rapid increases in wholesale values for the majority of the year. The Wholesale Weekly Price Index reached the highest point of the year at the end of December 2021, reporting over 1.51 points.

The graph below looks at trends in wholesale prices of 2-6-year-old vehicles, indexed to the first week of the year. The index is computed keeping the average age of the mix constant to identify market movements.

Retail (Used and New) Insights

  • Dodge has unveiled their first plug-in hybrid variant, the compact crossover Hornet, which is expected to get more than 30 miles of electric range; the Hornet will be available as a conventional gasoline model as well and is expected to reach dealerships later this year.
  • Volvo has launched a pilot program to install ChargePoint EV chargers at Starbucks stores from Denver to Seattle by year end.
  • The Pebble Beach Concours returned this year, giving automakers the opportunity to display concept models including the Acura ZDX, DeLorean Alpha5, Lucid Air Sapphire sedan, and Polestar 6 roadster.
  • Ford announced that an all-new Mustang would be unveiled at the Detroit auto show next month; this last ICE Mustang begins production in March 2023 as a 2024 model.

Used Retail Prices

Used Retail Prices are more accessible than in years past, due to the proliferation of ‘no-haggle pricing’ for used-vehicle retailing. Transparent pricing upfront makes the car buying process more enjoyable for customers and allows Black Book to accurately measure retail market trends.At the on-set of the pandemic, in CY2020, used retail prices increased slightly, following typical seasonal patterns, and then began dropping in April, finally hitting a low point in the late spring months. By late summer of CY2020, Used Retail Prices increased as supply of new vehicle inventory started to become scarce, but retail demand slowed down at the end of CY2020, resulting in declining retail asking prices for the last several weeks of the year. When CY2021 kicked off, demand rebounded while retail prices lagged slightly behind wholesale prices; March of 2021 started the dramatic increases in Used Retail Prices, fueled by stimulus payments, tax season, and shortages of new inventory. During the third quarter, retail prices continued to rise at a slower rate but soon picked up the pace once again to start the fourth quarter. In Q4, prices on retail listings steadily increased week after week. As CY2021 came to an end, the retail listing price index closed 36% above where the year began.

So far in 2022, the Retail Listings Price Index has remained relatively unchanged. Retail price trends for this year look very similar to the pre pandemic 2019’s trend.

This analysis is based on approximately two million vehicles listed for sale on U.S. dealer lots. The graph below looks at 2-6-year-old vehicles. The Index is computed keeping the average age of the mix constant to identify market movements.

Inventory

Used Retail

Used Retail Listing Volume has increased slightly as demand for used vehicles weakened.

The Used Retail Days-to-Turn Estimate has increased over the last month and now sits at 43 days.

Wholesale

The wholesale market last week remained consistent, as model year 2022 vehicles are continuing to slowly pop up through the lanes. Although there were some model year 2022 vehicles seen, the majority of sales were still mostly made up of newer older model years (model year 2018 though model year 2021). These vehicles had average conditions with average mileage. Smaller franchise dealers continued to dominate the lanes with few large independent dealers seen bidding. Inventory seemed to increase from weeks prior, while sales rates were seen to be lower than normal. Fuel prices for both gas and diesel are still decreasing, but that does not seem to help because we still saw a significant decrease in sales prices across all segments last week. In the Car segments, Prestige Luxury Car led the way followed closely by Compact and Luxury Cars. In the Truck Segment, Full-Size Luxury and Full-Size Crossover led the way with Mid-Size Crossovers, Compact Luxury, and Compact Crossovers following closely behind.

The Estimated Average Weekly Sales Rate dropped to 63% last week.

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