Specialty Market Insights – 6/16/2022

Motorcycle & Powersports Market Update

“Despite rising inflation and growing pessimism among the general public about the direction of the economy, Powersports values see strong growth across nearly all segments this month. Prices are up in all warm weather segments except metric cruisers, which are down only slightly. Continuing a trend we have been seeing since spring started, watercraft and jet boat values are up substantially once again. Last month we commented on how pricing increases were somewhat muted from historical averages for the season, but they have bounced back as we enter the summer months.”– Scott Yarbrough, Senior Analyst, Motorcycle & Powersports

May to June Average Segment Change in Value

The overall state of the Powersports market is much the same as it has been for the past few months, prices remain substantially elevated from historical averages, high consumer demand (though it is easing) and OEM supply constraints are combining to limit a return to more “normal” market conditions. The biggest issue for the industry, as well as everyone else at the moment, is looming interest rate increases by the Federal Reserve to cool off the economy and rein in inflation and spiraling energy costs.

Segment Spotlights & Industry News

Street Bike Segment Performance

Street bikes are one segment that shows a value curve that looks like it could have come straight out of pre-pandemic times. Values have increased steadily from January onwards and appear likely to peak in early July, the traditional high point in the market. The early months of this year’s selling season are a bit weaker than in the past, but since starting value levels were elevated, these number still represent a strong market for these bikes.

Off-Road Segment Performance

The dirt bikes are having a bit of an uneven year so far. Compared to last year where they were still riding the pandemic induced demand wave, they are behaving a bit more like they would in years past with one exception, their overall value level is still extremely elevated from where it would normally be. In 2021, before the vaccines became widely available and society opened back up, these units did not decline in value at all, but are now more volatile from month to month.

  • Dealership revenue from new and used sales declined an average of 2.1% in April from the same period last year according to data provided by CDK Global to Powersports Business. This was less of a drop than March’s 4.8% decline compared to last year. Contrasting with the drop in sales revenue, service department sales were up 7.8%, building upon February and March’s 4.6% and 4.7% increases.
  • Gas prices recently hit an average nationwide price of over $5 a gallon, a historic high. Much of this increase is due to Russia’s invasion of Ukraine, though continued demand as the economy recovers from the pandemic is also a contributing factor. U.S. oil production is running at an all-time high, but the global nature of the oil markets means higher oil prices are likely to hang around for a while.
  • Polaris Industries reported first quarter sales down 22% versus last year, primarily due to supply chain issues. Polaris noted that retail demand for their units remains strong, and their focus moving forward is to navigate supply chain constraints to increase unit availability.

Collectible Cars Market Update

“Last month we commented on all of the scary things that were going on in the world, and mentioned that we would be keeping a close eye on the stock market. Since then, the market has continued to get hammered, and is now officially in “Bear Market” (down 20% from its recent high) territory. ‘Will this impact the collectible vehicle market’, and ‘if it does, how’ are the questions we will be focusing on in the coming weeks.”– Eric Lawrence, Principal Analyst, Specialty Markets

Auction Activity

RM Sotheby’s held a private auction for Mercedes-Benz at their museum in Stuttgart in which the star of the event was a 1955 300 SLR Uhlenhaut coupe, one of only two roadgoing examples ever produced. The final selling price was $143 million, the most expensive vehicle ever sold at auction, with the proceeds of the sale going to establish the Mercedes-Benz Fund, which will endow environmental science research scholarships. Their Monaco auction produced sales of over $30 million, with an 82% sell through rate. Two of the top sellers were original Formula One race cars from Nigel Mansell’s personal collection, which accounted for approximately $8 million of the total.

Bonhams’ Monaco auction, held in association with the Monaco Historic Grand Prix, saw sales totals of approximately $14 million with a very strong sell through rate of 75%. Their Greenwich auction topped $6 million in sales, with a sell through rate of over 90%.

Mecum is off to quite a start in 2022, putting up huge sales numbers in Kissimmee, Florida; Glendale, Arizona; Houston, Texas; Indianapolis, Indiana; and Tulsa, Oklahoma. This year’s flagship Indy event marked Mecum’s 35th Anniversary and the results did not disappoint, with sales totals coming in at an amazing $126.5 million, an 18% increase over last year’s $107 million, which was itself an all-time record for the event. Over 2,500 vehicles crossed the block, with 81% of them finding new owners. Private collections accounted for nearly $47 million of the sales total, with the headlining Ray Evernham Collection coming in at $6.4 million on its own. A 1969 Dodge Hemi Daytona from the Motor City Muscle Collection set a new record for Daytonas sold at auction, and another record was set by a very rare 1971 Chevrolet Corvette ZR2 Convertible.

Notable Recent Auction Sales Include:

  • 1955 Mercedes-Benz 300 SLR Coupe $143,000,000 (RM Sotheby’s)
  • 1973 Ferrari 365 GTS/4 Daytona Spider $2,700,000 (RM Sotheby’s)
  • 1971 Lamborghini Miura SV Coupe $2,600,000 (RM Sotheby’s)
  • 1958 BMW 507 Roadster $2,200,000 (RM Sotheby’s)
  • 1965 Ferrari 275 GTS Convertible $1,550,000 (Bonhams)
  • 1965 Brawner Hawk Indy Car $2,200,000 (Mecum)
  • 1957 Mercedes-Benz 300SL Roadster $1,375,000 (Mecum)
  • 1969 Dodge Hemi Daytona Coupe $1,320,000 (Mecum)
  • 2019 Ford GT Carbon Series Coupe $1,210,000 (Mecum)
  • 1971 Chevrolet Corvette ZR2 Convertible $962,500 (Mecum)
  • 1955 Mercedes-Benz 300 SLR Courtesy of RM Sotheby’s

Market Trends

The Vintage Muscle Car segment represents high performance cars from American Motors, Ford, Chevrolet, Pontiac, Buick, Oldsmobile, Dodge, and Plymouth produced from the mid-1960s through the early 1970s. A few representative examples would be American Motors AMX 390, Buick GS400/455, Chevrolet Chevelle SS396, Dodge Charger R/T 440, Ford Torino Cobra 428CJ, Oldsmobile 4-4-2, and Pontiac GTO. Some Pony Cars with big block engines, such as Hemi ‘Cudas, Challenger R/T 440s, SS396 Camaros, and Pontiac Trans Ams will also cross over into this category. After dipping slightly in the latter part of 2017, muscle cars have been on a general upwards trend as similar new cars being sold currently have rekindled interest in the segment. Sales since January of this year have been particularly robust.

All of the collectible vehicle market segments we track increased in value during the past year, including Muscle Cars, Pony Cars, Post War American Classics, European/Asian Sports Cars, Vintage Exotics, and Classic Trucks & SUVs. The market has been very strong for over a year now, but we are keeping our eyes on several global situations that may impact the market in the next few months, including the war in Ukraine, inflation, the stock market, and the possible return of Covid. We commented a few months ago that one of the factors driving up collectible vehicle values was the shortage of new vehicles and the resulting jump in values of both new and used cars and light trucks. This situation shows no sighs of letting up, so consumers may continue to turn to collectible vehicles as their primary transportation. The stock market is a trickier question…on one hand as the market falls people have less overall wealth and may not feel as comfortible spending tens of thousands on a collectible vehicle, but on the other hand collectible vehicles are a tangible asset that they can see and touch, as opposed to an investment that they have absolutely no control over. The stock market has recently entered “Bear Market” territory (down 20% from its recent high), so this is probably the most pressing economic factor we need to keep our eyes on.

Recreational Vehicles Market Update

“The economic reports and the stock market’s performance have been pretty bad recently, but the RV dealers we have spoken to report that floor traffic is still strong. Many have also said they are approaching a more comfortable level of inventory, especially on towables, and that although some national chains are beginning to discount, it has not yet reached pre-pandemic levels.”Eric Lawrence, Principal Analyst, Specialty Markets

Wholesale RV Values Are Mixed But Volume Is Increasing

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

  • The average selling price was $73,350, down $3,068 (4.0%) from the previous month.
  • One year ago, the average selling price was $64,474.
  • Auction volume was up 17.8% from the previous month.
  • The average model year was 2009.

For Towables (including Travel Trailers and Fifth Wheels):

  • The average selling price was $20,883, up $522 (2.5%) from the previous month.
  • One year ago, the average selling price was $22,214.
  • Auction volume was up 14.1% from the previous month.
  • The average model year was 2016.

Industry Highlights

According to the RVIA, the total number of RVs shipped in April was 57,043, an increase of 11.5% over April 2021. Towables totaled 52,151 units (40,435 TT / 10,515 FW) and Motorhomes accounted for 4,892. Truck Campers came in at 445, Folding Camping Trailers reached 756, and Park Models were 443. Class B motorhomes (Van Camper) ended the month with 1,443 shipped, Class A’s (Conventional) totaled 1,442, and Class C’s (Mini) finished with 2,007.

  • THOR reported net sales of $4.66 billion for fiscal Q3 2022, up 34.6% over the same period in 2021.
  • Statistical Surveys, Inc. reported that there were 44,564 RV registrations in North America in April 2022, down 30.9% from 2021.
  • REV Group reported net sales for their recreation segment of $241 million, up 1.3% from the same period last year.
  • Inflation hit a 40-Year high in May, up 8.6% from last year. Gas, vehicles, and food were some of the primary drivers.
  • The RVIA announced that the RV industry has an overall annual economic impact of $140 billion and supports 680,000 jobs.
  • Camping World announced that they expect to complete 11 new dealerships in seven states by the end of the year.
  • The RVIA predicts that wholesale shipments will be roughly 550,000 for 2022, the second best year ever.

Medium and Heavy-Duty Truck and Commercial Trailer Market Update

Commercial Truck Market Update

“Values continue to cool down as temperatures across the country head in the opposite direction. We’ve experienced noticeable softening in wholesale and retail values for Over-the-Road and Regional Tractors with high miles. As new trucks slowly progress across the assembly lines, fleets are unloading their less desirable units and keeping their nicer trucks in service. New truck orders continue to amass as OEMs scramble to find enough parts to help meet demand. As we head into the next couple of months, tires and refrigerated units are going to be a hot topic as temperatures elevate and the supply chain remains injured.”– Josh Giles, Principal Automotive Analyst

Medium-Duty Trucks

  • Above we see the overall weighted monthly value adjustments for Medium-Duty units in classes 3 through 6. (2019-2020MY)
  • Heading into June, late model, Medium Duty truck values fell -2.9% ($1,949). Over the past three months this segment has dropped -6.2% ($4,179).

  • Over the past twelve months Medium Duty units have increased $11,546 (17.9%).
  • We will likely continue seeing a bit of softening in values over the next couple of months as new trucks slowly help release some of the air in the market.

Heavy-Duty Trucks and Tractors

  • The chart above illustrates the average monthly adjustment amounts for Heavy-Duty Trucks and Road Tractors within classes 7 and 8 (2019-2020).
  • From May to June, Construction/Vocational Units increased an overall weighted average of $652 (+0.5%).
  • From May to June, Regional Tractors dropped an overall weighted average of $3,626 (-3.1%).
  • From May to June, Over-the-Road Tractors dropped an overall weighted average of $3,629 (-3.3%).

Commercial Trailer Market Update

  • Commercial Trailer values continue to increase as freight demand increases and becomes more scarce.
  • Dry Van values (2017-2021) have increased $10,751 (+37.6%) since the beginning of 2022.
  • Dump Trailers values (2017-2021) have increase $2,383 (+5.4%) since the beginning of 2022.
  • Refrigerated Van values (2017-2021) have increased $8,850 (+18.5%) since the beginning of 2022.
  • Lowboy Trailer values (2017-2021) have dropped $500 (-0.7%) since the beginning of 2022.

Retail and Freight Demand

  • According to Federal Reserve Economic Data (FRED), new retail sales for commercial units (classes 4 through 8) dropped slightly from April to May. Conversations with OEMs indicates that retail numbers will likely decrease again in June.
  • This is significant because it gives us an idea of where the supply chain is as far as actual units available for service.
  • ATA Truck Tonnage is one of the many leading indicators when it comes to the strength and stability of the trucking and freight industry.
  • In March of 2022, ATA Truck Tonnage was reported at 117.7% compared to the baseline set back in 2015.
  • This is the tenth consecutive month where we’ve seen an increase in freight demand.

It’s going to be interesting to what the market over the next couple of months. Truck values are extremely over inflated, new and used inventory is limited, and construction and freight demand continue to increase. All of this will help contribute to a slow depreciation in values over the next couple of months.

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