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Wednesday, 14 October 2020 23:34

Why Dealers Are Now ‘Exercising Caution’

Written by Auto Remarketing Staff

Index

Dealerships sold millions of used vehicles during the summertime, including a four-month stretch of year-over-year sales gains.

However, Black Book isn’t necessarily seeing buyers and managers rushing to replenish store inventory.

 

According to their newest "COVID-19 Market Insights" released Oct. 13, analysts highlighted a typical autumn wholesale price cooldown, explaining those softer prices aren’t always bringing the hammer down to send vehicles onto transport trucks bound for stores.

 

“Retail demand has softened, but dealers are still in need of inventory after the strong summer sales. However, they are exercising caution in purchasing high-priced inventory,” Black Book said in the latest report. “Instead, they are being very selective with their purchasing decisions.
 
“Lower-mileage used vehicles continue to be good substitutes for the models that still lack in new supply, like full-size trucks that have days’ supply well under 30 days,” analysts added.

 

Speaking of those full-size trucks, analysts noticed prices for those units finally dipped after 19 weeks of increases. Full-size truck values dipped by 0.18%.

 

Triggered in part by that movement, Black Book’s volume-weighted data showed overall truck segment values---including pickups, SUVs and vans---declined by 0.34% last week, nearly doubling the previous week’s drop of 0.19%.

 

Analysts mentioned that both mainstream and luxury subcompact crossovers continue to experience heavy value declines as they plummeted by 1.13% and 0.98%, respectively.


Black Book also pointed out that new-model inventory levels of full-size crossovers and SUVs continue to be low too, “so depreciations are remaining fairly stable.” Those units edged down by just 0.05% this past week. 

 

On the car side, value depreciation accelerated compared to the previous week.

 

According to Black Book’s volume-weighted data, analysts said overall car segment values decreased 0.92% the last week, up from the previous week’s drop of 0.66%.

 

Black Book noticed that mainstream car segments---subcompact, compact, midsize and full-size---all suffered declines of more than 1% with those sub-compacts leading the way at 1.40%.

 

The report mentioned that premium sporty cars continue to generate interest as values for those units ticked just 0.02% lower, counter to the overall car segments trends.

 

“Sales results at the auctions improved last week for many remarketers as many floors have now been adjusted to reflect the softening in wholesale values,” analysts said.

 

“This was not the case for all sellers, with many of the dealer lanes seeing a lot of ‘ifs’ and high no sale rates on a few luxury manufacturer lanes with remarketers holding firm to floors,” they added.

 

One other trend Black Book mentioned in the latest report directly correlated with how dealers are behaving in the lanes.

 

“A couple of weeks ago, we noticed the success the independents were finally having in being able to successfully bid against the larger buyers. However, this past week we did see that change a bit as the larger buyers got a little more aggressive in their bidding,” analysts said.

“This was especially true on the lanes where the remarketer was letting go of most any of the inventory that received a bid,” analysts went on to say.

 

We thank Auto Remarketing for reprint permission.

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