08/29/2023
08.29.2023
Market Insights – 8/29/2023
Wholesale Prices, Week Ending August 26th
Wholesale declines continued last week, but the rate of decline did show some signs of slowing down, with the overall rate depreciation coming back under 1% for the first time this month. Some dealers are starting to plan for the potential of a UAW strike and that is pushing them to the lanes to ensure they have inventory “just in case”.
This Week Last Week 2017-2019 Average (Same Week)
Car segments -0.83% -1.73% -0.10%
Truck & SUV segments -0.87% -1.43% -0.14%
Market -0.86% -1.52% -0.12%
Car Segments
On a volume-weighted basis, the overall Car segment decreased -0.83%. For reference, in the previous week, cars decreased by -1.73%.
The 0-to-2-year-old Car segments were down -0.37% and 8-to-16-year-old Cars declined -1.49%, compared with the prior week’s declines of -1.20% and -1.90%, respectively.
Eight of the nine Car segments decreased last week, and three of those had declines exceeding 1%.
Premium Sporty Car increased +0.46% last week. The size of the segment is small and last week’s performance was heavily influenced by strength of the Chevrolet Corvette.
For the last three weeks, the Compact Car segment was declining more than 2% each week- the largest decline of any car segment during that time period, but this week, the depreciation slowed to -1.37% and the highest depreciation went to the Sub-Compact Car segment, which dropped -2.10%. Sub-Compact Car has now averaged -1.59% depreciation per week, over the past four weeks.
Truck / SUV Segments
The volume-weighted, overall Truck segment decreased -0.87%, which is much less than the depreciation seen the prior week, of -1.43%.
The 0-to-2-year-old models declined -0.73% last week, while the 8-to-16-year-olds declined -0.95%.
All thirteen Truck segments declined last week, with five of the segments declining more than 1%.
The Full-Size Crossover/SUV segment had the largest decline last week, down -1.49%. The segment has averaged a weekly decline of -1.50% over the past four weeks.
Full-Size Pickups had a couple of weeks of large declines, primarily driven by drops in the 1500 series trucks, but the rate of decline slowed last week to -0.57%.
Compact and Full-Size Vans continue to have the lowest depreciation, declining -0.39% and -0.46%, respectively, last week.
Weekly Wholesale Index
The graph below looks at trends in wholesale prices of 2 to 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.
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 then remained relatively stagnant through most of CY2022. In Q4 of 2022, the Retail Listings Price Index 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
The Used Retail Active Listing Volume Index currently sits at 1.02 points.
The Used Retail Days-to-Turn estimate is currently hovering above 51 days.
Wholesale
For four weeks in a row now, the market has shown heavy declines in both the car and truck segments, but last week, declines started showing signs of slowing down. With increases in no-sales seen last week buyers are showing signs of being more cautious about the uncertainty of the wholesale market. Other factors contributing the heavy declines include high fuel prices and interest rates continuing to rise. Now, with a looming UAW strike coming soon, which could potentially reverse this downward trend, no one seems to know what to expect next, with this coming weeks results.
That’s why here at Black Book, we have our team of Analysts focused on keeping their eyes on the market, watching for developing trends and insights.
The estimated Average Weekly Sales Rate declined to 48%.
