Ricky Beggs, managing editor at Black Book, provides this week's edition of "Beggs on the Used Car Market." Beggs returned from one of the industry's largest gatherings of remarketing professionals at the 2011 Car/IARA/NAAA Conference, co-sponsored by Bobit Business Media. Here is his analysis of the show:
Congratulations to "Coach" Ed Bobit, founder of the CAR Conference, for receiving the very prestigious NAAA Warren Young Fellowship Award. This is one of many industry awards presented during the conference that were received through hard work and consistent support of the remarketing industry. Gus Xamplas of the Donlen Corporation completed the testing requirements and became the 18th remarketing professional to complete the Certified Automotive Remarketer program that has been created and administered through IARA.
There were some tremendous presentations from auction managers and owners, dealers, credit unions, fleet management companies, economists, and other industry specialists. And as always, the time to exchange ideas and experiences with industry associates is invaluable. This is not the kind of event where 'what happens in Vegas stays in Vegas'. I am sure that new "best practices" are already in place due to the program and events. The enthusiasm about the industry was at an all-time high and I am sure great things will happen within the industry as this excitement continues.
As I got back to the office, the summary of the market and the results of the Editors' analysis supported the conference's enthusiasm toward stronger car values. As one of the topics of many conversations was regarding the price of gas, the recent increase in interest and market values on cars continued to be reflected in stronger, more active bidding, and in the end, higher sales prices. With 9 of the 10 car segments going up in value for the week, the overall average price of the cars was up by $46, after a climb of $22 from the previous week. This week's increase was the largest increase in the car segments in over a year. The only segment which dropped in value was a very small -$5 decline for the Prestige Luxury Cars (PLC), and this was the smallest decline this year for that segment.
On the truck side of the business, even as we talked and focused on the rising gas prices, 7 of the 14 segments went up in value. With all of the crossovers - the compact, mid-size and full-size - going up, we also had Compact Pickups (CPT) climbing in value, and a surprising +$37 increase on the Luxury SUVs (LSU). For the second consecutive week the largest decline in value within the truck segments was, as anticipated, the Full-size SUVs at -$74.
With over 67 percent of the adjustments being increases in value, this was the largest percentage of positive adjustments since the week ending May 7, 2010, which completed a run where 8 of the previous 10 weeks' adjustments ranged from 62 percent to a high of 86 percent being increases.
Throughout the CAR Conference, comments were consistent as to the shortage of used vehicle inventory and ultimately the need for more consignment at the auctions. Based on end of term lease turn in volume throughout the next year, and the volume of new car sales, and ultimately trade-ins, this pattern of overall strong used values should continue through this year and into early 2013, as long as no unforeseen catastrophic issues raise their head.
Thanks for all the positive comments regarding this weekly market update. We hope it continues to add insight and support of your daily and weekly efforts. Please give us a call or drop me an email with your comments. We look forward to seeing you on the auction lanes. Have a great week!