Market Insights

Wholesale Prices, Week Ending Aug. 12

Wholesale price corrections accelerated over the week, remarketers dropping floor prices in order to move vehicles faster. We saw one of the largest week-over-week price declines across many segments in the week’s results, compact cars and full-size trucks showing the biggest changes. Increasing new inventory, combined with increasing incentives, is pushing down wholesale prices in anticipation of used-retail price declines in the near future.

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

Car segments                        -1.35%              -1.36%               -0.15%

Truck & SUV segments       -1.49%              -0.98%               -0.19%

Market                                 -1.45%             -1.10%              -0.18%

Car Segments

• On a volume-weighted basis, the overall car segment decreased 1.35%. The previous week, cars decreased by 1.36%.

• The 0- to 2-year-old car segments were down 0.97%, and 8- to 16-year-old cars declined 1.46%.

• All nine car segments decreased, five of the nine reporting declines exceeding 1%.

• Compact car led the drops for the car segments, down 2.35%, an increase from the prior week’s already large decline of 2.12%.

• In sharp contrast to the compact car segment, the premium sporty cars declined 0.33%, a normal depreciation for this time of year.

Truck / SUV Segments

• The volume-weighted overall truck segment decreased 1.49%, an increase in depreciation compared to the prior week’s drop of 0.98%.

• The 0- to 2-year-old models declined 1.25%, while the 8- to 16-year-olds declined 1.42%, compared to only -0.55% the previous week.

• All 13 truck segments declined, and seven had declines greater than 1%.

• Full-size trucks dropped 2.66%, more than any of the declines in the early days of the pandemic. In the retail market, incentives are picking up, particularly on the Ram 1500s, and that is putting pressure on the used market.

Weekly Wholesale Index

The graphic below looks at trends in wholesale prices of 2- to 6-year-old vehicles, indexed to the first week of the year. The index is computed keeping the average age of the mix constant to identify market movements.

Used Retail Prices

Used retail prices are more accessible than in years past due to the proliferation of no-haggle pricing. Transparent pricing upfront makes the car-buying process more enjoyable for customers and allows Black Book to accurately measure retail market trends.At the onset of the pandemic, in CY2020, used-retail prices increased slightly, following typical seasonal patterns, then began dropping in April, finally hitting a low point in the late spring months. By late summer of CY2020, they increased as supply of new-vehicle inventory started to become scarce, but retail demand slowed at the end of CY2020, resulting in declining retail asking prices for the last several weeks of the year. When CY2021 kicked off, demand rebounded while retail prices lagged slightly behind wholesale prices; March 2021 started the dramatic increases in used retail prices, 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 soon picked up again to start the fourth quarter, when they steadily increased. As CY2021 came to an end, the retail listing price index closed 36% above where the year began. The index remained relatively stagnant through most of CY2022. In the fourth quarter, the Retail Listings Price Index started to decline but not as steeply as the wholesale price index.

This analysis is based on approximately two million vehicles listed for sale on U.S. dealer lots. The graphic below looks at 2- 6-year-old vehicles. The index is computed keeping the average age of the mix constant to identify market movements.

Inventory

Used Retail

The Used Retail Active Listing Volume Index currently sits at 1.02 points.

The Used Retail Days-to-Turn estimate is currently hovering above 51.

Wholesale

For the second week in a row, the market had steep declines in wholesale values. This week, full-size trucks and compact sars had the largest declines of all segments. With that said, we did see an increase in total auction conversion rates, showing that demand is there for vehicles priced right. Sellers were willing to lower their floors in order to move more inventory, but the question now is whether floors are now low enough or if declines continue next week.

As always, the Black Book team of analysts will keep their eyes on the market, watching for developing trends and insights.

The estimated Average Weekly Sales Rate improved to 50%.