Black Book Market Insights

Wholesale Prices, Week Ending September 17th

The wholesale market continued its decline last week, with the rate of decline remaining consistent with the past seven weeks. Retail listing volume has been increasing and retail listing prices are starting to soften. Typically, it takes six to eight weeks for the retail market prices to reflect declines in wholesale pricing.

                                            This Week         Last Week        2017-2019 Average (Same Week)

Car segments                        -0.89%                -0.84%                -0.25%

Truck & SUV segments       -0.91%                -0.97%                -0.12%

Market                                  -0.90%                -0.93%                -0.17%

Car Segments

• On a volume-weighted basis, the overall Car segment decreased -0.89%. For reference, the previous week, cars decreased by -0.84%.

• All nine Car segments decreased last week.

• As fuel prices continue to drop, the Compact Car segment, that experienced large gains when fuel prices were increasing, has now had twelve consecutive weeks of declines. The segment had the largest Car segment decline last week, with a depreciation of -1.17%.

• Sub-Compact Car (-0.62%) reported its largest single week decline for the segment since the middle of August 2021.

Truck / SUV Segments

• The volume-weighted, overall Truck segment decreased -0.91%, compared to the prior week’s decrease of -0.97%.

• All thirteen truck segments reported decreases.

• Full-Size Crossover/SUV (-1.59%) and Small Pickup (-1.46%) reported the largest declines of the truck segments last week.

• Full-Size and Compact Van had another week of very minimal declines, -0.07% and -0.16%, respectively.

• For the first time in eight weeks, the Full-Size Luxury Crossover/SUV (-0.44%) segment reported declines under 1%.

Weekly Wholesale Index

Calendar year 2020 and 2021 ended with used wholesale prices at elevated levels. With economic patterns (including the automotive market) driven by the pandemic, normal seasonal patterns (e.g., 2019 calendar year) in the wholesale market were not observed for most of the last 2 years. We saw a similar picture in 2009, at the end of the Great Recession. Calendar year 2021 did not have typical seasonality patterns as the market had rapid increases in wholesale values for the majority of the year. The Wholesale Weekly Price Index reached the highest point of the year at the end of December 2021, reporting over 1.51 points.

The graph below looks at trends in wholesale prices of 2-6-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.

Retail (Used and New) Insights

• Ford unveiled their seventh-generation Mustang at the North American International Auto show; the 2024 Mustang is scheduled to go on sale next summer.

• Chrysler announced a limited production 300C variant with a 6.4-liter Hemi engine; the 300 will go out of production after the 2023 model year.

• Volkswagen Group is expected to start trading a Porsche IPA on the Frankfurt Stock Exchange this month.

• Electric vehicles, hybrids, longtime top-sellers and new models from upstarts such as Lordstown and Rivian dominate the list of 26 semifinalists for 2023 North American car, truck and utility vehicle of the year.

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.

Now in 2022, the Retail Listings Price Index has remained relatively unchanged. In fact, retail price trends for this year look very similar to the pre-pandemic 2019’s trend.

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

Used retail active listing volume continues to increase and is now at 1.10.

The Used Retail Days-to-Turn Estimate seems to be remaining somewhat stagnant at around 41 days.

Wholesale

Even though floors remain high, buyers keep showing up. Sales rates across the board have been fairly dismal. Although we have been in a holding pattern over the last few weeks, there seems to be some positive momentum on the horizon. After dominating the lanes for months, rental companies have been relatively quiet in the lanes lately, as some manufactures are beginning to allocate inventory to fleets again. This may also be why franchise dealers have been noticeably absent in lane, as new inventory becomes more consistent for some dealers. As we head toward the fourth quarter, during a normal year, we would expect model year changeovers and rapid-fire launches. While that has not been the case over the last two years, this year could be different. Manufacturers have moved forward with refreshes and redesigns for model year 2023 and 2024 vehicles, and we look forward to seeing those at dealerships soon. Independent dealers have stayed consistent in lane, always on the hunt for low mileage, good condition “unicorns”. There were more IF sales last week, which could indicate that sellers are more willing to negotiate. Wholesale values have had significant decreases, much higher than would be expected this time of year.

The Estimated Average Weekly Sales Rate remained at 58% last week.