During the summer months, wholesale prices for used fleet vehicles remained stable June through August. One reason for this stability was the lower volume of inventory at auction, which has caused buyer demand to increase. “Although consignment volumes were down, prices and days-to-sales were almost unchanged,” said Weber. “The decreased volume has caused the percent of units sold first time through the auction to increase.”
“Resale values for intermediate-size sedans have increased compared to same time last year;” said Bill Cieslak, vehicle operations manager for PHH Arval, a fleet management company in Sparks, Md. Cieslak agrees with Weber that what has contributed to the improvement in wholesale prices is the decreased vehicle inventory at auction. “Consumer lease portfolios have decreased, while the same number of dealers, if not more, are buying at auctions. This has caused the supply and demand situation to be very favorable for consignors,” said Cieslak. “This year, spring came early, and it stayed longer. In the spring, there is a ‘lift’ in resale prices when consumers receive their tax refunds. This year it started earlier due to the increased number of electronic refunds and the lift lasted until May. Normally, prices start to throttle back in April.”
Work trucks and cargo vans continue to be in strong demand among dealers in the wholesale market. “There is never a shortage of buyers at high transaction levels for either mid-size or full-size cargo vans and work trucks,” said Cieslak. Minivan prices, on the other hand, continue to remain soft. “One reason is the oversupply of minivans in the wholesale market for the past couple of quarters,” said Cieslak. “In addition, consumer-buying preferences are shifting from minivans to SUVs and crossover vehicles.”
During the summer, the strongest wholesale market was in the Southeast, in particular the corridor stretching from North Carolina, Alabama, and Mississippi, said Weber.
Cieslak anticipates a strong resale market in the fall. “But I’m tentative about my forecast because the wholesale market is heavily influenced by retail incentives,” he said. “If manufacturers need to stimulate retail sales by increasing incentives, then we will find ourselves challenged this fall.” Weber foresees new-vehicle retail incentives continuing at their current levels into the 2005-model year. “As long as new-vehicle prices stay down, so will resale prices,” he added. In the long-term, Weber is optimistic about residual values because of the number of all-new vehicles in the product pipeline. “These new models, along with the cross-over segment and hybrids have a real potential to help in-crease used-vehicle prices,” said Weber. “However, there is a lot of uncertainty in the market. As we know, an unanticipated economic or political upheaval could dramatically impact both new- and used-vehicle sales. If things continue as-is, then used-vehicle prices will increase, but there are a lot of wildcards out there.” Let me know what you think. [email protected]
Originally posted on Automotive Fleet