With auto show season in full swing, new-vehicle introductions mean eventual changes in used-vehicle values and often in fleets’ remarketing strategies. Automotive Fleet spoke with Black Book’s Ricky Beggs, senior analyst for the company, about the effect models introduced at the North American International Auto Show (NAIAS) in Detroit will have on used-vehicle values in the future.
With fleets using pickup trucks as core workhorse vehicles, new truck introductions can mean major changes in resale values depending on the number in the marketplace and new features on upcoming models. At NAIAS, Chrysler’s Ram 1500 received the Truck of the Year award, General Motors brought its all-new upcoming Chevrolet Silverado and GMC Sierra trucks, and Ford showed a new concept vehicle, the Atlas Concept, which hints at what the automaker is planning for its F-Series pickups in the years to come. With all these new trucks arriving, or scheduled to arrive, in the marketplace, what’s going to happen to their resale values? According to Beggs, demand should remain strong.
“I think there is a lot of pent up demand for full-size pickup trucks for two reasons,” Beggs said. “In the workforce, we’re on the verge of housing and commercial construction starting up again. Next, if you look at the East Coast and all the repairs that will be needed, there is definitely a need for pickup trucks. That’s why I’m bullish on this market.”
Beggs noted that over a three-month period, pickup truck values only depreciated 7/10ths of a percent, looking at 2010-MY vehicles, a model-year that many fleets are remarketing right now. In addition, when looking at the time period of Feb. 1, 2012 through May 1, 2012, pickup truck values actually increased 1.7%. He said that although the market won’t likely see pickup truck values increase by that large a percentage during the Feb. through May period in 2013, he said there could be an uptick, especially due to funds available from the federal government for rebuilding post Hurricane Sandy.
Other segments that Beggs commented on include compact cars, the values of which have held up fairly well compared to previous years. Beggs said that depreciation for 2012 was only a drop of 10.6 percent, which is still well below the drop this segment has traditionally experienced (15% to 18%). Still, many vehicles in the mid-size car segment have improved fuel economy and creature comforts compared to previous model-years. Also, fuel economy in this segment is comparable to vehicles in the compact segment. These factors could reduce the resale value of compact cars in the future, according to Beggs.
By Greg Basich
Originally posted on Automotive Fleet