BLACK BOOK – Wholesale Prices, Week Ending November 20th

Values aren’t showing any signs of slowing down, with most expecting this strength to last through the traditional Spring selling season. Sellers are holding firm to floors, with the expectation that if it doesn’t sell this week, it will the next week.

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

Car segments                         +0.70%       +0.58%               -0.65%

Truck & SUV segments        +0.61%       +0.55%               -0.46%

Market                                  +0.64%      +0.56%              -0.53%

Car Segments 

• On a volume-weighted basis, the overall Car segment increased +0.70%. For reference, the previous week, cars increased by +0.58%. 

• All nine car segments reported gains again last week.   

• Near Luxury Cars had the largest Car segment increase at +1.03%. This is a segment that has a large lease penetration rate and with this strong market, very few of those are making it to the auction lanes. 

• Despite the cooling temperatures, Sporty Car (+0.06%) and Premium Sporty Car (+0.14%) reported gains again last week. 

Truck / SUV Segments 

• The volume-weighted,  overall Truck segment increased +0.61%, compared to the prior week’s increase of +0.55%.  

• All thirteen truck segments reported gains last week. 

• Compact Vans had a large increase of +2.04% last week, but the segment is very small in volume.  

• The Sub-Compact and Compact Crossover segments of both the mainstream and luxury variants are seeing large week-over-week increases. The Compact Luxury (+1.20%) and Sub-Compact (+1.13%) Crossovers both exceeded 1% last week.   

Weekly Wholesale Index 

Calendar year 2020 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 year. We saw a similar picture in 2009, at the end of the Great Recession. Calendar year 2021 has not had typical seasonality patterns as the market has had rapid increases in wholesale values for the majority of the year. After reaching record heights at the end of June, wholesale prices began to decline at a rate higher than the typical seasonal decline through July and most of August. As we moved into the Fall season, wholesale prices began to show a positive movement once again and reached the highest point of the year last week again, at 1.48. 

The graph below looks at trends in wholesale prices of 2-6-year-old vehicles, indexed to the first week of the year.  

Retail (Used and New) Insights

• GM converted their Detroit-Hamtramck plant into a new EV plant, Factory ZERO, which opened in Michigan this week and has already been building pre-production examples of the GMC Hummer SUT.  

• Ford and Rivian have scrapped plans to develop an electric vehicle together; the vehicle makers mutually decided to each focus on their own projects. 

• The 2021 Los Angeles Auto Show wrapped up this weekend and 3 major introductions at the show — the Fisker Ocean, Subaru Solterra and Toyota bZ4X — were all electric.  

• Canoo announced plans to establish its HQ and an advanced manufacturing industrialized facility in Bentonville, Arkansas. 

• Kia unveiled their 2023 Kia Sportage Hybrid (HEV), which has gone from one of the smallest SUVs in its class to one of the largest and is the third model in an ongoing cadence of eco-minded offerings guided by Kia’s global EV strategy, ‘Plan S.’ 

Used Retail Prices

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down at the end of last year, and thus resulted in declining retail asking prices for the last several weeks of 2020. As demand rebounded, retail prices have lagged slightly behind wholesale prices, but March had an accelerated growth in retail prices. In April and May, retail prices picked up speed as demand accelerated, 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 have since picked up. After continued strong increases, the retail listing price index has increased to just over 33% above where we started the year.  

This analysis is based on approximately two million vehicles listed for sale on US dealer lots. The graph below looks at 2-6-year-old vehicles. 

Inventory

Used Retail

After some stabilization in October, used retail listings have declined to around 17% below where we started the year. This volume trend goes against what is considered typical. The graph below shows that this is lower than what was seen in both CY19 and CY20. With significantly reduced new inventory volume and decreasing used inventory, it is no surprise that there are fewer retail listings available overall.  

Days-to-turn for used retail listings have slightly increased and now sit just above 38 days, which is still lower than what is typically expected in a normal year but is higher than this time last year.  

Wholesale

As we go into the holiday season, the volume of newer used vehicles is typically expected to increase as lease returns and rental vehicles come back into the market, but this year will most likely look a little different. New model year vehicles have been trickling into the lanes, but a significant portion of vehicles have been purchased upstream or come to the lanes damaged. With franchise dealers having more opportunities to buy inventory at grounding, the fierce competition in lane can be mostly attributed to large independent dealerships and rental companies. Inventory scarcity has caused bidding wars across the country. Wholesale values and floors continue to increase and give no indication of slowing down. 

The weekly estimated average sales rate has remained stable at the 70% mark for the 2nd week in a row. This time last year, the estimated average weekly sales rate was around 51%, so while floor prices continue to rise, buyers continue to purchase vehicles at auction at a higher rate.   

The overall wholesale market for 2-8–year–old vehicles increased.