Black Book: Wholesale Values Ease

The used market continues to be a strong indicator of the current economic conditions of the country, according to Ricky Beggs, managing editor of Black Book.

Used vehicles continue to be the preferred means of transportation over new models due to the lower purchase prices and shorter loan terms as compared to new vehicles. "The differences in monthly payments between new and used vehicles are not as widespread as they were two to three years ago," Beggs says.

Used-vehicle values continue to be relatively strong in retention based on historical levels, although that strength has eased somewhat in the past month. In June, the market required an average of 5637 adjustments per week with the price of both cars and trucks falling an average of $65. Looking back two months to the market results during May, the average car price went up $138, while the trucks increased by $64.

When comparing the monthly trends of three-year-old used vehicles, Beggs says the year over year, three-month, and monthly value trends had less strength.

A comparison of July 1, 2009 to July 1, 2010 for the same 2008 models revealed that only one segment type - the mid-size pickups - increased year over year. Over the most recent three-month period the market is still pretty strong with eight of the 24 segments increasing in value. But for the most recent period from June 1 to July 1, only three segments - full-size wagons, compact pickups and mid-size pickups - have increased. Compare this to the May 1 to June 1 period which had 13 segment types increase in value.

When comparing 2007 models, only three segment types increased year over year - mid-size pickups, min-van wagons, and compact sport utilities. The prior three-month trend was pretty strong with 12 segments increasing over the period. The most recent monthly period shows an overall downward slide in the market with only the full-size pickups, full-size wagons and compact pickups showing increases in value. During the prior month from May 1 to June 1, 17 of the 24 segments had increased values.

According to Beggs, 2006 models are showing a bit more strength in the market with these slightly lower priced vehicles. "This is a sign of the economy indicating consumers just don't want to spend as much for longer periods of time for later model used and new vehicles as during stronger economic conditions," he says.

Among 2006 model years, six segments are up year over year. Thirteen segments increased for the recent three-month period. Four segments - compact crossovers, full-size wagons, compact pickups and full-size pickups - increased for the recent monthly reporting period.

"The bottom line, as we see the market adjust on a daily basis, is the difference from new to slightly used in value. The later models, the used 2009s and 2010s are moving in the wholesale channels, but in lower percentages of the overall offerings than other model years," Beggs says.

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