Black Book: Weekly Market Report

Wholesale Prices, Week Ending March 4th

The gains are continuing, both in the increases vehicle valuations are experiencing and in conversion rates at auctions. Week-over-week increases have now reached levels we have not experienced since the fourth quarter of 2021.

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

Car segments                     +0.46%        +0.27%              -0.32%

Truck & SUV segments    +0.30%         +0.18%             -0.38%

Market                               +0.35%         +0.21%             -0.35%

Car Segments

• On a volume-weighted basis, the overall car segment increased +0.46%. For reference, the previous week, cars increased by +0.27%.
• Seven of the nine car segments increased last week.
• For the first time since November 2021, a car segment increased more than 1% in a single week. Last week the Sporty Car segment increased +1.35%, marking the seventh consecutive week of increases for the segment.
• After 41 weeks of declines, the Luxury Car segment reported an increase of +0.14%. The previous 41 weeks averaged a weekly decline rate of -0.67%.

Truck / SUV Segments

• The volume-weighted, overall truck segment increased +0.30%, compared with the prior week’s increase of +0.18%.
• Ten of the 13 truck segments reported increases last week.
• The Compact Crossover and Small Pickup segments had the largest truck segment gains last week, both with an increase of +0.52%.
• Full-size vans had a record streak of increases in 2021 and most of 2022 but have been on a downward trend since late July 2022 for an average decline of -0.21% over the past 34 weeks.

Weekly Wholesale Index

The graph below shows trends in wholesale prices of 2- to 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.

Calendar years 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 three 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 most 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. In 2022, the price index was on a mild rollercoaster until July, after which point prices were on a continuous decline until the end of the year.

Retail (Used and New) Insights

• Ford filed for a patent for a self-repossessing system that would enable a vehicle to repossess itself or at least limit the functions of the vehicle.
• In other Ford news, the company announced that it will restar production of the F-150 Lightning on March 13th after production was halted in mid-February due to an issue with the battery.
• VinFast delivered its first 45 VF8 crossovers to U.S. customers last week, all of them in California. The company initially shipped 999 units to California. The company also recently cut the lease price of the VF8 by roughly 50%.
• VW announced plans to build an assembly plant for its battery-electric pickup, Scout, in Blythewood, S.C.

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 onset 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 the fourth quarter, prices on retail listings steadily increased week after week. As CY2021 ended, the retail listing price index closed 36% above where the year began. The index then remained relatively stagnant through most of CY2022. In the fourth quarter of 2022, the Retail Listings Price Index declines started, 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- to 6-year-old vehicles. The index is computed keeping the average age of the mix constant to identify market movements.

Inventory

Used Retail

The used retail active listing volume index reverted back to one at the start of 2023. Currently, the index sits at 0.99 points.

The Used Retail Days-to-Turn estimate is around 48 days.

Wholesale

The first week of March started off as expected, with sales rates continuing to increase across the country. Sporty Car saw the largest price increase across both the car and truck segments this week. Another positive observation from the lanes, improvement in the quality of the vehicles crossing the auction block. The improvement in condition is also contributing to the higher sales rates. The Black Book team is always available to answer any questions or concerns you may have on the wholesale market.

The Estimated Average Weekly Sales Rate increased to 50% last week.