BLACK BOOK – Market Insights: Issued on 12/28/2021

Wholesale Prices, Week Ending December 25th

Winter and Christmas sales events make for a busy end of year for dealers, but the last two weeks of the year are traditionally slow for the auctions and that held true this year. Auction activity slowed down last week. Sellers held firm to floors and less buyers were present during the sales.

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

Car segments                     -0.08%             +0.04%                -0.58%

Truck & SUV segments    +0.02%            +0.15%                -0.44%

Market                               -0.01%             +0.11%                -0.50%

Car Segments

• On a volume-weighted basis, the overall Car segment decreased -0.08%. For reference, the previous week, cars increased by +0.04%.

• Compact Cars decreased for a fourth consecutive week, -0.32%, after the prior week’s decline of -0.16%.

• Mid-Size Cars continue to increase. This past week’s increase of +0.14% marks the nineteenth week of gains for an average weekly increase of +0.62%.

• The Premium Sporty Car segment declined -0.31% last week, compared to -0.05% the week prior.

Truck / SUV Segments

• The volume-weighted, overall Truck segment increased +0.02%, compared to the prior week’s increase of +0.15%.

• Full-Size Vans reported another week of gains, increasing +0.68%. This now marks the forty-seventh increase in the last forty-eight weeks.

• The other two van segments, Compact and Minivan, also reported increases of +0.76% and +0.58%, respectively.

• Compact Luxury Crossovers experienced the largest decline of -0.34%, while the week prior they declined by -0.08%.

Weekly Wholesale Index

Calendar year 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. Calendar year 2021 has not had typical seasonality patterns as the market has had rapid increases in wholesale values for the majority of the year. After reaching record heights at the end of June, wholesale prices began to decline at a rate higher than the typical seasonal decline through July and most of August. As we moved into the Fall season, wholesale prices began to show positive movement once again. As calendar year 2021 comes to a close, wholesale prices are stabilizing with small overall increases. The Wholesale Weekly Price Index reached the highest point of the year last week, once again, this time reporting over 1.52 points.

The graph below looks at trends in wholesale prices of 2-6-year-old vehicles, indexed to the first week of the year.

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 at the end of last year, and thus resulted in declining retail asking prices for the last several weeks of 2020. As demand rebounded, retail prices have lagged slightly behind wholesale prices, but March had an accelerated growth in retail prices. In April and May, retail prices picked up speed as demand accelerated, fueled by stimulus payments, tax season, and shortages of new inventory. During the third quarter, retail prices continued to rise at a slower rate but have since picked up. In Q4, prices on retail listings have steadily increased week after week. As we finish up the year, the retail listing price index now sits at around 35% above where we started the year. The scarcity of both new and used inventory in the market continues to fuel these consistent increases.

This analysis is based on approximately two million vehicles listed for sale on U.S. dealer lots. The graph below looks at 2-6-year-old vehicles.

Inventory

Used Retail

Used retail listings have fallen again and now sit around 16% below where we started the year. This is not a great sign as we head into what is historically one of the busiest times of year for retail vehicle sales. We would typically expect retail listing volume to increase dramatically at this point, which can be seen in the graph for both CY 2019 and 2020.

Days-to-turn for used retail listings have started to level off and now sit at around 38 days, which is still lower than the 42-day average seen in prior years.

Wholesale

The weekly estimated average sales rate dropped to 65% this week. Last week, sellers held firm to their floors and buyers were not as plentiful. The last two weeks of the year are always busy for dealers, but typically slow for the auction lanes.

Despite the lower sales rates across many of the auction lanes this past week, there is one group of vehicles that continues to perform well – low mileage, newer used vehicles. The few low mileage, good condition units that can be found in the market are bringing top dollar. The overall wholesale market for 2-8-year-old vehicles decreased by -0.01% last week, and 0-2-year-old vehicles increased +0.07%.