BLACK BOOK – Here are some highlights from the last week:

• Signs of a Spring market are continuing to blossom with wholesale prices experiencing another week of overall increases, with the rate of gain growing.

• Traditional Spring/tax season segments, Compact Cars and Sporty Cars both had increases again last week.

• The impacts of the global microchip shortage are growing each week. This past week, GM announced further impacts on production, with some facilities now seeing disruptions lasting into March. Help is hopefully on the way as the Biden administration vowed last week to take action to support domestic automotive manufacturing.

Wholesale Prices, Week Ending February 13th

Signs of a Spring market are continuing to blossom with wholesale prices experiencing another week of overall increases, with the rate of gain growing. Traditional Spring/tax season segments, Compact Cars and Sporty Cars both had increases again last week.

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

Car segments                          +0.39%.         +0.23%                     -0.35%

Truck & SUV segments         +0.22%          +0.09%                     -0.36%

Market                                    +0.28%          +0.14%                     -0.36%

Car Segments

• Compact Cars, a segment that traditionally sees increased demand as a result of Spring and tax season buying, has been seeing continual increases in recent weeks. This past week was no different, with the rate of increase growing to exceed 1% (compared to 0.77% the week prior).

• The Near Luxury Car segment was the only Car segment to see a decline this past week, but it was minimal at -0.07%.

• The Sporty Car and Premium Sporty Car segments had large levels of weekly increases in recent weeks, but the rate of increase did slow this past week, but this is still an earlier increase in the year than is typical.

Truck Segments

• The overall Truck market saw continued growth this past week at a rate of 0.22%, compared to 0.09% the week prior.

• The entry level crossover segments, Sub-Compact and Compact, are gaining steam with increased rates of appreciation this past week. The price point makes them a desirable option for dealers preparing for the Spring/tax season market.

• Sub-Compact Luxury Crossovers have been on an upswing in valuations in recent weeks, but this past week the values took a dip as the available volume on the lanes increased.

• The gains in the Small Pickup segment (0.46%) outpaced the Full-Size Pickups (0.29%) this past week.

Weekly Wholesale Index

2020 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 year. We saw a similar picture in 2009, at the end of the Great Recession. The question still remains whether we will go back to normal seasonality in 2021. So far, Spring market arrived about 7 weeks earlier than during a typical pre-COVID year.

Retail (Used and New) Insights

• NADA looked different this year as it went all virtual, but much of the same content and access to vendors was made available to attendees. Some of the news highlights from the week:

  • Genesis announced the coming of a new BEV crossover, to be called GV60, that is expected to be launched at the end of the year.

  • Ford announced their plans in the electrified commercial space through their release of the Transit and F-150. The E-Transit is set to go on sale later this year and the electrified F-150 will come out in 2022.

  • Volkswagen’s expectations for the year are high as they are looking for their new crossovers, the Taos and ID.4, to give them a boost in sales.

• The impacts of the global microchip shortage are growing each week. This past week, GM announced further impacts on production, with some facilities now seeing disruptions lasting into March. Help is hopefully on the way as the Biden administration vowed last week to take action to support domestic automotive manufacturing.

Used Retail Prices

With the proliferation of ‘no-haggle pricing’ for used-vehicle retailing, asking prices accurately measure trends in the retail space. Retail demand slowed down leading up to the December holidays, and thus resulted in declining retail asking prices over the last several weeks of 2020. As demand rebounded in January, retail prices seemed to lag wholesale prices – retail asking prices continued to decline throughout January. This analysis is based on approximately two million vehicles listed for sale on US dealer lots.

Volume

Used Retail

Used retail listing volume stayed essentially flat since the beginning of the year but remains at levels above where the industry was in January, during the pre-COVID time of 2019.

Days-to-turn have been increasing since November and is approaching a historic average level.

Wholesale

• Auction sales rates continued with their upward momentum again this past week. Select locations, particularly in the Northeast, are still not seeing the same level of increased demand. However, other parts of the country are seeing high levels of success as all types of buyers are actively engaging in the bidding, from your large buyers to smaller independents to franchise.

• The presence of physical bidders is appearing to play a role in the level of success. The lanes with bidders physically present are seeing the highest conversion rates.

• In recent weeks, the dealer lanes were experiencing some increases in no-sales, but this past week these same lanes saw more “if-bids” instead of no-sales. This is just another sign of increased demand and the buyers’ willingness to step-up the price they’re willing to pay.