Black Book: Weekly Market Report

Black Book Market Insights

Wholesale Prices, Week Ending December 10th

Sales rates continue to be less than ideal, with many buyers exercising caution for fear of loading up on inventory that does not turn quickly, especially when values are experiencing heavy declines week after week.

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

Car segments                      -0.86%             -0.87%                 -0.82%

Truck & SUV segments     -0.90%              -0.65%                 -0.66%

Market                                -0.88%              -0.72%                 -0.72%

Car Segments

• On a volume-weighted basis, the overall Car segment decreased -0.86%. For reference, the previous week, cars decreased by -0.87%.
• All nine Car segments decreased last week, with three of the nine reporting declines greater than 1% (Sub-Compact, -1.20%; Prestige Luxury, -1.14%; Compact, -1.13%).
• Sub-Compact Car has averaged a decline of -1.21% per week over the past six weeks.
• In sharp contrast to the Sub-Compact Car segment, that has been showing regular large declines, the Premium Sporty Car segment has averaged a weekly depreciation of -0.48% over the past six weeks.

Truck / SUV Segments

• The volume-weighted, overall Truck segment decreased -0.90%, compared with the prior week’s decline of -0.65%.
• All thirteen Truck segments reported declines last week, but only one reported a decline over 1%- Compact Crossover at -1.20%.
• Full-Size Pickup depreciation increased last week to -0.95%, after averaging -0.49% per week over the past six weeks.
• Full-Size Van (-0.41%) had the largest depreciation for the segment since the third week of July (-0.55%).

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 two 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

• General Motors revealed that development of an all-electric Chevrolet sedan is underway. Currently, the sedan is only for the Chinese market, but there is potential it could make its way to the US as a Malibu replacement.
• Polestar is now offering a software upgrade for owners to gain more horsepower on their Polestar 2 model. The Performance Package costs $1,195 and is available in an over-the-air upgrade that takes 4.2 seconds off the car’s zero to 60 mph time.
• Toyota has announced that the Sub-Compact Crossover, C-HR, is discontinued for next year and will only be available in Europe.
• The Buick Encore GX is getting a fresh look for 2024 and will feature the new Buick logo as well as other exterior styling updates.

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.

The index has remained relatively stagnant through most of CY2022. Now, in the fourth quarter of 2022, the Retail Listings Price Index has started to decline, but not as steep as the wholesale price index.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 active listing volume was consistent at 1.13 last week.

The Used Retail Days-to-Turn estimate is around 47 days.

Wholesale

The wholesale channels remained consistently slow last week. We are still seeing model year 2023 vehicles coming through lanes, so are expecting to see more 2024 announcements now that we are coming to the end of the fourth quarter. Floors in many lanes are still high, but buyer count is stable. Sellers are holding onto their floors, leading to sales rates still being down. The increase in “If” sales gives us hope that sellers will start to soften their floors soon. Inventory is fairly consistent with prior weeks. We still have seen no announcements of flood vehicles running through the lanes from the hurricane. Consistent with recent weeks, rental companies are making a strong appearance as well as large independent dealers. Franchise dealers are more selective, but most of the competitive bids were between the large independent dealers and rental companies. Like prior weeks, overall, the wholesale channels are still following the downward trend. The price of gas is also following in a declining pattern.

The Estimated Average Weekly Sales Rate continues to drop, hitting 48% last week.