Black Book Market Insights

Wholesale Prices, Week Ending November 12th

The fourth quarter typically accounts for the majority of the yearly depreciation, but this year the declines started in Q3 and are continuing to trend higher than typical for this time of year. Many of the segments are experiencing declines exceeding 1% each week, but pricing remains well above pre-pandemic levels.

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

Car segments                        -1.02%          -1.28%             -0.65%

Truck & SUV segments       -0.92%           -0.94%            -0.62%

Market                                  -0.96%           -1.05%             -0.63%

Car Segments

• On a volume-weighted basis, the overall Car segment decreased -1.02%. For reference, the previous week, cars decreased by -1.28%.

• All nine Car segments decreased last week, and four of the nine had declines greater than -1%.

• The Car segments have declined on average -1.17% per week over the last four weeks.

• Full-Size (-1.41%) and Mid-Size Car (-1.36%) had the largest declines last week, but the level of depreciation was less than the previous week’s declines of -1.46% and -1.63%, respectively.

• Premium Sporty Car continues to decline (-0.59%), but declines have been lowest of all the Car segments over the past 6 weeks.

Truck / SUV Segments

• The volume-weighted, overall Truck segment decreased -0.92%, compared with the prior week’s decline of -0.94%.

• All thirteen Truck segments reported declines last week. Seven of the nine segments had declines greater than 1%.

• The Minivan segment continues to experience large drops, -1.63% last week. The segment has now declined an average of -1.90% over the past 3 weeks.

• Full-Size Van had another week of minimal declines, -0.16% compared with the prior week’s -0.15%.

• Full-Size Pickup (-0.44%) had a fifteenth week with declines that were less than the overall market level depreciation.

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

• The LA Auto Show also kicks off this week on November 18, with many alternate fuel type vehicles expected to be showcased, including the Kia EV9, Hyundai Seven, Fisker Ocean, Vinfast VF8 and VF9. Porsche is expected to display ICE vehicles including the introduction of the 911 Dakar.

• Insurance Auto Auction (IAA) is expected to be sold to Ritchie Bros. Auctioneers in the first half of 2023.

• Foxconn Ventures will invest up to $170 million in Lordstown Motors Corp.; the investment will be used for the development and design of a new EV program in collaboration with Foxconn.

• Ford announced more leadership changes with Joy Falotico, President of Lincoln, Stuart Rowley, Ford’s chief transformation and quality officer, and Steven Armstrong, VP of India and South America transformation, all retiring in December or January.

• Audi is working with Holoride to bring immersive virtual reality entertainment for passengers of Audi vehicles, starting now in Germany and becoming available in the US early next year.

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 remained at 1.15 this week, showing a 15% increase in volume since the beginning of the year.

The Used Retail Days-to-Turn estimate is just over 45 days.

Wholesale

The wholesale channels have remained consistent this week with lower condition vehicles. With these low condition cars, we still have not seen as much impact from Hurricane Ian as originally expected. Flood vehicles still have not been announced in the lanes. Some more model year 2023 vehicles are popping up in the lanes with very low miles. A lot of buyers were still not physically in the lanes, but they were competitively bidding online. Rental companies and large independent dealers still showed up even though floors remain high in many lanes. Sellers are still holding very tight to their floors, and most of the cars that did not sell were not up for negotiation. Some lanes had higher inventory than others, but across the board inventory is still limited. Being in the last quarter of the year and with the model 2023 vehicles coming in, we expect to continue to see more 2024 vehicle launches. Overall, the market is following prior weeks in a downward trend.

The Estimated Average Weekly Sales Rate continues to drop, hitting 52% last week.