Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Black Book Reports Increased Auction Activity

February 05, 2009

Following a very rough year for both new and used automobile dealers, the first month of 2009 brought some much needed good news for most used vehicle sellers. Whereas the majority of dealers were shaking their heads in disbelief over the lack of interest and falling values for trucks and SUVs throughout most of 2008, January brought more head shaking and disbelief, but this time it was accompanied by smiles, brought about by the increased number of bidders, and the aggressive manner in which they bid on these same types of vehicles.

Ricky Beggs, vice president and managing editor of Black Book, commented "With all of the gloom over the struggling economy in general, and the automotive industry in particular, the one bright spot we've seen so far this year is the excitement on the auction lanes. With dealers restocking for 'tax season' and also filling some holes in their inventory left from end of year sales, the reduced supply of vehicles at auction helped improve market values for many segments.

A few examples of models that improved greatly throughout January included Avalanche, Expedition, Explorer, F-Series, Grand Cherokee, H3, Navigator, Ram Trucks, Sequoia, Silverado, Sierra, Tacoma, Tahoe, and Yukon; all of which increased from $1,400 to $2,100.

Looking at a broader picture of the changes which occurred during January, there were eight market segments that increased in value both in absolute dollar and percentage amounts. These were led by full size pickups, full-size SUVs, midsize SUVs, and luxury SUVs. The segments that struggled the most during January included entry level cars, compact cars, premium sporty cars, and entry midsize cars. The main driver of vehicle values this past month, for both those segments that went up and those that went down, was gasoline prices…the relatively low prices have caused the segments that had been hit the hardest by high fuel prices to rebound, while the more economical vehicles, which had done so well when gasoline was at $4 a gallon, have continued to slide.

Year over year trend analysis shows seven vehicle segments that have depreciated more than thirty percent, including prestige luxury cars, full-size crossovers, luxury level cars, minivans, midsize crossovers, luxury SUVs, and compact SUVs. There were only three segments which experienced annual depreciation of less than twenty percent, which is historically a "typical" amount: compact pickups, full-size pickups, and midsize pickups, although some of these segments had a tremendous swing in value in both directions during the past year.

"The bottom line is that dealers must constantly stay focused on the market by attending the auctions, not just to change or add to your inventory, but to see firsthand how the market is changing in their specific areas. Used car dealers are almost always the most entrepreneurial business people, and their ability to adjust to market fluctuations drives their success. In the rapidly changing market that we witnessed throughout the last month, these business skills have definitely proven their importance," added Beggs.

 

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