Low Inventory of Vehicles Continues to Bolster Wholesale Resale Values
Market Trends • April 11, 2006
“There’s lots of demand for used vehicles,” said Layne Weber, vice president of remarketing for Donlen Corp. “Typical fleet cars that are cycled under similar parameters are stronger in resale value this year than they were last year. There’s been a steady upward trend in prices for the past two years.”
The lower inventory of units in the wholesale market has also increased the sold percentage of vehicles run at auction sales. “Nowadays, we are disappointed if an auction sale doesn’t sell 75 percent of what we run. It is not uncommon to see sales over 90 percent.”
In addition, fleets benefited from a strong seasonal resale market. “Resale values for cargo vans and work trucks were especially strong this spring because of high demand from seasonal labor companies, such as contractors and landscapers.” Also, the low inventory of pickups in the wholesale market continued to keep dealer demand high. “There are few late-model pickups at auction. The volume is very low,” added Weber.
Vehicle segments with soft resale values are large SUVs and minivans. High gasoline prices have dampened demand for large SUVs, but not all SUVs. “We continue to get incredible prices for compact SUVs, such as the Liberty and Escape,” said Weber. Resale values for minivans continue to be soft. “But there is still a strong market for minivans as long as you understand the pricing dynamics,” said Weber.
The strongest resale markets are the Pacific Northwest and the Southwest. Certain metro markets in the Midwest are very weak, prompting relocation of vehicles to stronger markets.
Originally posted on Automotive Fleet