Black Book: Specialty Market Insights

BLACK BOOK – Specialty Market Insights

Motorcycle & Powersports Market Update 

“Whether it is as a result of current inflationary pressures causing a pullback from consumers, or is more evidence of a return to traditional seasonal valuation patterns, prices have dropped for most segments as we reach the mid-point of summer. Only the watercraft, which have been exceptionally strong all season, and the street bikes, are showing significant upwards changes this month. Virtually all other segments are down from one to nearly three percent.”– Scott Yarbrough, Senior Analyst, Motorcycle & Powersports

June to July Average Segment Change in Value

Economic news comes in two varieties these days, historically low unemployment numbers coupled with record corporate profits, or historically high inflation numbers coupled with pessimism about current and future purchasing power from regular consumers. This tension about the how the economy is actually doing, and which viewpoint winds up being correct, is one of the two most important factors determining where Powersports values go from here. The other one is the ongoing shortage of new units. Even now, two full years into the pandemic, supply chains are not able to adequately meet demand, though the situation is improving slowly as dealers build inventory.

Segment Spotlights & Industry News

Cruiser Segment Performance

The Cruiser segment shows some interesting trends. First, values appear to have peaked a month earlier than what we saw last year and in years past. Second, after running in parallel at the beginning of the year, for the past several months the domestic V-Twins have been outperforming their metric counterparts by a significant margin. Last year at this time, it was the metric units that slightly outperformed their domestic competition.

ATV & Utility Vehicle Segment Performance

The ATVs and Utility Vehicles are a bit more of a mixed bag. During the initial stages of the pandemic, and even before for the Utility Vehicles, these segments showed strong value growth as consumers turned to socially distant forms of recreation. Now that nearly all restrictions on public gatherings are gone, these units are still in high demand, but traditional seasonal changes in valuation are beginning to occur once again as unlike last year, we are seeing declines in value.

• BRP has agreed to acquire Great Wall Motor Austria GmbH (GWMA) from the Chinese auto OEM Great Wall Motor. GWMA is an electric vehicle research and development center specializing in e-drive systems and transmissions. This is part of ongoing efforts by BRP to bring electrification to 50 percent of its lineup by 2035 according to Auto Finance News.
• Continuing the electrification of Powersports theme, EV manufacturer Volcon announced that they have taken over $70 million dollars’ worth of pre-orders for their first utility vehicle, the Stag, which has all-wheel drive and an MSRP of $39,999, according to Powersports Business.
• Inflation continues to be a top economic concern as the latest numbers from the US Bureau of Labor Statistics showed prices increased by 9.1% for June compared to a year ago. Gasoline, groceries, and rent were some of the major drivers behind the large jump. When adjusted for inflation, hourly wages fell 1% during the month, and are down 3.6% from last year.

Collectible Cars Market Update

“Last month we commented on all of the scary things that were going on in the world, and wondered how they might impact the market. Mixed in with the gloom, there has been some positive news recently, and classic car auctions continue to be well attended and produce impressive results, with new records being set almost every time. Online auctions are also doing very well, with big selling prices and high sell throughs.”– Eric Lawrence, Principal Analyst, Specialty Markets

Auction Activity

• Barrett-Jackson’s three-day Las Vegas, Nevada auction was very successful, with a sales total of $49.1 million. This was a “no reserve” auction, so the sales rate was 100%. Bidding was brisk and attendees were very enthusiastic, resulting in forty new world records being set. The auction’s undisputed stars were American muscle cars, particularly Dodge and Plymouth Hemis, but Chevrolet and Ford high performance vehicles were well represented as well. There were also many beautifully crafted “resto-mods” and full customs, most of which brought top dollar. Their next auction will be held in Houston, Texas in October.
• RM Sotheby’s recently held a private auction for the only Ferrari Enzo that left the factory painted white, specifically Bianco Avus. There were only 400 Enzos built, and most were red, with only a handful being painted in special order colors. The final sales price was not made public, nor was the winning bidder identified.
• 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 second annual Summer Special auction, held in Orlando, Florida at the Orange County Convention Center, added $34.8 million to the total. Their top ten sellers were pretty evenly split between late model exotics, classic muscle cars, and custom vehicles.

Notable Recent Auction Sales Include:

• 2017 Lamborghini Aventador $440,000 (Mecum)
• 2005 Ford GT Coupe $379,500 (Mecum)
• 1959 Chevrolet Impala Convertible 348 $319,000 (Mecum)
• 1987 Buick GNX Coupe $225,500 (Mecum)
• 1967 Shelby GT500 Fastback $220,000 (Mecum)
• 1970 Plymouth Superbird Hemi $1,650,000 (Barrett-Jackson)
• 1963 Chevrolet Corvette Split Window Z06 Coupe $566,000 (Barrett-Jackson)
• 1971 Plymouth ‘Cuda Hemi Coupe $550,000 (Barrett-Jackson)
• 1970 Dodge Challenger RT Hemi Coupe $379,500 (Barrett-Jackson)
• 2009 Mercedes-Benz SL65 Black Series $335,000 (Barrett-Jackson)
• 1959 Chevrolet Impala Convertible Courtesy of Mecum

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. However, they have increased in value steadily over the past year, as have the majority of collectible vehicles.

Most of the collectible vehicle market segments we track increased in value during the past month, including Muscle Cars, Pony Cars, Post War American Classics, European/Asian Sports Cars, and Classic Trucks & SUVs. The only one to decline was the Vintage Exotic segment, and that was by less than half a percent. The collectible 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. The stock market is a trickier question…on one hand as the market falls people have less overall wealth and may not feel as comfortable 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. As of mid-July, the stock market has recovered some of its losses, but it is still very unpredictable.

Recreational Vehicles Market Update

“The economic news has been generally negative for the past several months, with many articles talking about inflation, the falling stock market, high fuel prices, and the possibility of a recession. Against this gloomy backdrop, the values of both motorized and towable RVs declined from the previous month. Auction volume was down as well, which is not terribly unusual for this time of year.”Eric Lawrence, Principal Analyst, Specialty Markets

Wholesale RV Values Decline As Volume Decreases

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

• The average selling price was $68,948, down $4,402 (6.0%) from the previous month.
• One year ago, the average selling price was $68,623.
• Auction volume was down 21.7% from the previous month.
• The average model year was 2010.

For Towables (including Travel Trailers and Fifth Wheels):

• The average selling price was $20,196, down $687 (3.2%) from the previous month.
• One year ago, the average selling price was $23,176.
• Auction volume was down 3.8% from the previous month.
• The average model year was 2016.

Industry Highlights

According to the RVIA, the total number of RVs shipped in May was 50,529, an increase of 2.6% over May 2021. Towables totaled 45,608 units (35,213 TT / 9,065 FW) and Motorhomes accounted for 4,921. Truck Campers came in at 526, Folding Camping Trailers reached 804, and Park Models were 411. Class B motorhomes (Van Camper) ended the month with 1,677 shipped, Class A’s (Conventional) totaled 1,422, and Class C’s (Mini) finished with 1,822.

• THOR announced it has authorized management to repurchase up to $600 million of its stock.
• Statistical Surveys, Inc. reported that there were 47,309 RV registrations in May 2022, down 31.5% from 2021.
• RV Retailer announced the opening of their new dealership in Katy, Texas, a suburb of Houston.
• Inflation hit a 40-Year high in June, up 9.1% from last year. Gas, vehicles, and food were some of the primary drivers.
• The RVIA announced that 65 million Americans plan to take an RV vacation this year.
• Winnebago announced third quarter net revenues of $1.5 billion, up 52% over 2021.
• The RVIA predicts that wholesale shipments will be roughly 550,000 for 2022, the second-best year ever.

Medium and Heavy-Duty Truck & Commercial Trailer Market Update

Commercial Truck Market Update

“Commercial values continue to fall as new supply slowly increases. Prior to May, the majority of Medium and Heavy-Duty trucks and commercial trailers were on an eighteen month long increasing trend. Truck values are still well above pre-Covid transaction levels. We expect to see continued depreciation for the next couple of months before reaching another plateau. Be extra cautious in what you pay for equipment over the next few months unless you already have a buyer. Some dealers are still hanging on to equipment purchased when the market peaked and are going to take a bath. Hopefully, the market will reach its correction level a little earlier than expected; however, all signs suggest being very conservative when buying or selling over the next couple of weeks.” – 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 July, late model, Medium Duty truck values fell -1.3% ($817).

• Over the past four months this segment has dropped 7.5% ($4,996)
• 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 June to July, Construction/Vocational Units increased an overall weighted average of $ 163 (+0.1%).
• From June to July, Regional Tractors dropped an overall weighted average of $1,528 (-1.4%). This segment has depreciated 4.7% over the past couple of months and is expected to increase in depreciation heading into August.
• From May to June, Over-the-Road Tractors dropped an overall weighted average of $1,226 (-1.1%). This segment has depreciated 4.2% over the past couple of months.

Commercial Trailer Market Update

• Commercial Trailer values dropped heading into July as demand slows and new inventory is delivered.
• Dry Van values (2017-2021) fell 14.3% heading into the third quarter of the year.
• Dump Trailers values (2017-2021) were relatively flat heading into July.
• Refrigerated Van values (2017-2021) fell 6.3% heading into July.
• Steel Flatbed values (2017-2021) were flat heading into July.
• We expect to see further deprecation in commercial trailers as new inventory becomes available.
• We advise our customers to be very cautious in their purchasing and conservative in pricing heading into the second half of 2022, especially on refrigerated vans.