Black Book: Specialty Market Insights

Motorcycle & Powersports Market Update

“Happy New Year!  Our second year of the Pandemic is now behind us, and much like 2020 before it, 2021 was a “good” year for the Powersports industry.  Prices continue to be elevated well beyond typical levels across the board, and while there are still issues around both new and used vehicle supply, more normal levels of units are entering the market with each passing day.  We expect the New Year to bring a gradual return to traditional seasonal valuation patterns, while still maintaining somewhat elevated pricing levels with higher-than-average monthly volatility.” – Scott Yarbrough, Senior Analyst, Motorcycle & Powersports

December to January Average Segment Change in Value

Values this month have mostly held steady, increasing or decreasing by fairly small amounts. These minimal changes are noteworthy as in a typical January (remember those?) many segments would be nearing their low point for the year with drops of two, three, four or more percent. All of our changes this month are less than two percent. The water segments are down 1.9% while the sleds are up 1.6%. Only the ATVs and Dual Sports join these two segments with changes over a full percent. All other segments show very little change from last month. With prices still elevated from historical norms, this remains an exceptional market, and will likely continue to be so for quite a while.

Segment Spotlights & Industry News

Street Bike Performance

The Street Bike segment is, like many segments at present, on a rocky path back towards what we would call normal seasonal pricing trends. Where last year at this time prices were still on a steady upwards trajectory, they are now quite volatile, jumping from increases one month, to decreases the next, and back up again, but overall, the current elevated pricing levels are trending downwards long-term.

ATV & Utility Vehicle Segment Performance

The ATVs and Utility Vehicles are behaving much like the Street Bike segment, with elevated pricing levels showing month to month volatility as they gradually begin to come back towards more normal levels over time. The off-road segments have fared well over the past two years and like much of the Powersports industry, are currently constrained by lower-than-expected new production, helping to keep prices elevated.

• Prepare for a strong Spring selling season for Personal Watercraft and Jet Boats. Numerous dealers have told us they have already pre-sold nearly all of their incoming new units from the manufacturers and are now looking to the used market to fill showrooms.
• COVID continues to be an issue across the industry as the NVP Product Expo in Louisville, KY that was to be held Jan 29-30 has been canceled. This is due to health concerns related to the spread of the Omicron variant amid the ongoing pandemic.
• The American International Motorcycle Expo (AIME) is being held this month in Las Vegas. After a year off due to COVID, it will be great for the industry to finally gather in person again. We will be there to keep up with industry news and report back to you next month.
• Snowmobile manufacturers are reining in incentives as dealers see strong sales and high margins amidst continuing production delays according to Auto Finance News, a trend we have seen in other segments as well.

Collectible Cars Market Update

“By the time you’re reading this, the January auction extravangza will have already kicked off, with Mecum’s flagship Kissimmee, Florida sale running from January 6-16th, and the multiple high end sales held in Scottsdale, Arizona following about a week later. January always sets the tone for the year, and all indications are that these auctions will be well attended and bidding will be strong, especially for the premier vehicles.”– Eric Lawrence, Principal Analyst, Specialty Markets

Auction Activity

• RM Sotheby’s had a great year, reporting auction sales of $406 million and private party sales of $150 million, for a grand total of over $550 million. Much of their late 2021 news revolved around staffing changes and new a leadership structure, but they have confirmed that they are full steam ahead for 2022. They further announced their world-renowned restoration department has added a state-of-the-art machine shop, allowing them to complete top flight restorations entirely in-house. Their Scottsdale auction, held January 27th at the Biltmore, will feature an array of meticulously restored pre-war luxury automobiles, including a very rare and original alloy bodied 1955 Mercedes-Benz 300 SL Gullwing.
• Mecum had a huge year in 2021, with total sales of $578 million and an overall sell-through rate of 90%, which they reported was “the highest annual total ever achieved by a U.S. domestic-based live collector car auction company.” They are eagerly anticipating their Kissimmee, Florida sale, where an estimated 3,500 vehicles will cross the block over the 11-day time frame. They have secured more than 30 private collections for the auction, many of which will be offered at no reserve. The headline vehicle will be the famous 1951 “Hirohata” Mercury Custom by Barris.
• Gooding & Company also had a great year, with sales totaling over $150 million. In addition to selling the two most expensive vehicles of the year (1995 McLaren F1 for $20.4 million and 1959 Ferrari 250 GT LWB California Spider Competizione for $10.8 million) they set multiple world auction records including examples from Bugatti, Duesenberg, Aston Martin, Lamborghini, Ferrari, and Mercedes-Benz. Their Scottsdale event will be a hybrid, with in-person viewing but remote bidding, using their Geared Online platform. Bidding will begin January 24th and run through the 28th.

Notable Recent Auction Sales Include:

• 1988 Lamborghini Countach 5000S $275,000 (Mecum)
• 1958 Chevrolet Impala Convertible 348 Tri-power $151,250 (Mecum)
• 1990 Ferrari Testarossa $148,500 (Mecum)
• 1974 Ford Bronco Custom $148,500 (Mecum)
• 1931 Packard Eight Phaeton $143,000 (Mecum)
• 2005 Porsche Carrera GT $1,902,000 (Bring A Trailer)
• 2008 Alfa Romeo 8C Competizione $349,000 (Bring A Trailer)
• 2006 Ford GT Coupe $462,000 (Bring A Trailer)
• 2014 Lamborghini Aventador Roadster 50th Anniv $515,000 (Bring A Trailer)
• 2003 BMW Z8 Alpina Roadster $354,000 (Bring A Trailer)
• 2003 BMW Z8 Alpina Roadster Courtesy of Bring A Trailer

Market Trends

The Vintage American Post War Classics segment represents “big American iron” produced from the mid-1940s up through the mid-1970s. This encompasses a wide range of vehicles, and the prices can correspondingly range from the mid-teens up into the low six figures. A few representative examples would include Buick Skylark, Cadillac Eldorado (Seville and Biarritz), Chevrolet Bel Air and Impala, Ford Crown Victoria, Lincoln Mark III, Chrysler 300 Letter Series, Mercury Turnpike Cruiser, Dodge Polara, Plymouth Fury, Hudson Hornet, and Pontiac Bonneville. These vehicles have been squarely at the heart of the hobby for decades, but shifting tastes have led to a gradual decline in their values as older collectors age out of the hobby and are replaced with younger ones who grew up being interested in different cars. They have risen a little during the post-COVID boom that is affecting the values of all collectible vehicles.

The majority of the collectible vehicle segments we track increased in value last month, including Muscle Cars, American Classics, European Sports Cars, Vintage Exotics, and Classic Trucks & SUVs. Only Pony Cars declined, and it was by a slight fraction of a percent. As we noted earlier in this report, January is a huge month for collectible car auctions, and we’ll be tracking the results closely. One contributing factor to the general upwards trend is the lack of vehicles at new car dealerships, and the associated price increases of normal used vehicles, that are steering some consumers towards a collectible to use as their daily driver until the supply of regular vehicles increases and prices come back down to more typical levels.

Recreational Vehicles Market Update

“For the first time in quite a while all of the RV market segments we track behaved in a way that would be expected in a ‘normal’ year, with the values of both motorized and towable units declining at wholesale auctions as we head into winter. With RV manufacturers setting production records month after month, it’s possible that the supply of used units is finally catching up with the demand.”Eric Lawrence, Principal Analyst, Specialty Markets

Wholesale RV Values Decline Across The Board

For Motorhomes (including Class A, B, and C):

• Average selling price was $79,270, down $2,114 (2.6%) from the previous month.
• One year ago, the average selling price was $60,067.
• Auction volume was up 2.1% from the previous month.
• The average model year was 2011.

For Towables (including Travel Trailers and Fifth Wheels):

• Average selling price was $21,405, down $908 (4.1%) from the previous month.
• One year ago, the average selling price was $19,346.
• Auction volume was up 7.7% from the previous month.
• The average model year was 2015.

Industry Highlights

According to the RVIA, the total number of RVs shipped in November hit 49,135, the highest amount ever for the month, and an increase of 15.6% over November 2020. Towables totaled 43,881 units and motorhomes accounted for 5,254. Truck Campers came in at 444, Folding Camping Trailers reached 645, and Park Models were 290. Class B motorhomes (Van Campers) ended the month with 1,693 shipped, Class As totaled 1,321, and Class Cs finished up with 2,440.

• The RVIA has released updated projections that total RV shipments for 2021 will reach 602,200 units (a 40% increase over 2020). 2022 is also projected to see shipments in excess of 613,000, with an expected range of 599,760 to 627,700.
• Winnebago Industries reported first fiscal quarter 2022 revenue of $1.2 billion, a company record.
• Camping World is projected to announce sales of $1.32 billion for the current quarter.
• THOR Industries announced net sales for their first fiscal quarter of $3.96 billion.
• The 2022 Florida RV Supershow will be held in Tampa January 19-23.
• Statistical Surveys, Inc. reported that there were 33,446 retail RV registrations in October, down 24% year over year.

Commercial Truck Market Update

“As we start a new year and open the doors to 2022, commercial vehicle values continue to rise due to increasing demand and lack of supply. Each month that the factories are not producing 100% or more of their planned production the supply deficit increases. This is causing many to continue pushing out their forecasts, as far as when production will catch up to demand and the market will return to somewhat of a normal depreciation trend. Fortunately, wholesale values on classes 3-8 trucks, tractors, and commercial trailers will continue to rise over the next couple of months before leveling off of the remainder of the year. Below you can see just how much each segment has increase over the past 12 months. We expect to see stable values for the next couple of years as OEMs scramble to try and increase production amongst all the supply chain issues. – Josh Giles, Principal Automotive Analyst, Valuations & Residuals

Medium-Duty Trucks

• Above we see both the monthly adjustment amounts and the overall weighted average value trends for Medium Duty cab/chassis units in classes 3 through 6 for model years 2011-2018.
• From December to January, Medium Duty Trucks increased an overall average of 7.6% compared to the 6.0% increase seen the prior month.
• We have seen a 39.3% increase in wholesale values since January of 2021. While we do not expect to see values in 2022 increase near as much as they have in 2021; we I do expect prices a year from now to be a little higher than where they currently sit.

Heavy-Duty Trucks and Tractors

• Above we see both the monthly adjustment and the overall weighted average value trends for Heavy-Duty trucks and road tractors in classes 7 and 8 for model years 2011-2018.
• From December to January, the Construction segment increased 5.8%, Over the Road units increased 6.5%, and Regional Tractors increased an overall average of 7.5%.
• Since this time last year Construction units have increased 29%, Over the Road units increased 46.6, and Regional Tractors have increased 50%.

Commercial Trailer Market Update

• Commercial Trailer values continue to increase as new production issues are causing scarcity in both new and used inventory.
• Wholesale and retail transactions on all trailer segments continue a positive trend as demand continues to rise.
• In addition to transportation, some trailers are used as storage. With freight being backed up due to supply chain issues and driver shortages, Dry Vans, Refrigerated Vans, and Lowbed trailer demand has surpassed the rest of the segment.
• Dry Van values have increased 8.4% during the fourth quarter of 2021. Dry Vans increased 17.8% during Q3 of 2021.
• Dump Trailers increased just 2.0% heading into 2022. This segment was relatively flat during Q2 of 2021. We expect demand and values for this segment to increase over the next 6-8 months as operators are having to resort to using more Dump Trailers because new Dump Truck production issues continue to grow.
• Refrigerated Vans values increased 9.0% heading into January. This segment increased 14% for Q4 of last year.
• Much like the truck segments, we do not expect trailer values in 2022 to increase at the rate we experienced in 2021. We expect trailer values a year from now to be around the same value they are today.

Retail and Freight Demand

• According to Federal Reserve Economic Data (FRED), new retail sales for commercial vehicles in classes 4 – 8 fell in October. In November 2021 Retail Sales for these segments were at 35,176, which is 3,159 units less than October. To put this into perspective, the October just before the pandemic hit Retail Sales were just over 46,000.
• We expect to see these numbers stabilize and slowly begin to increase towards the fourth quarter of this year.
• ATA Truck Tonnage is one of the many leading indicators when it comes to the strength and stability of the trucking and freight industry. For the 5th consecutive month, we’ve seen this number rise, which is wonderful news as distribution companies work to release some of the congested ports.
• In November of 2021 ATA Truck Tonnage came in at 114.4% compared to October’s rate of 113.5%.
• Freight demand remains strong and continues to trend in a positive direction. Hopefully, supply chain issues will improve, leading to more trucks and trailers entering the market as distribution numbers in North America are expected to continue increasing.

Originally posted on F&I and Showroom