Market Insights

Wholesale Prices, Week Ending May 6

The market turned last week, with overall declines for the first time since early February. The 8 -to 16-year-old units began to experience softening two weeks ago and continued to speed up their depreciation last week, dropping 0.15%. For reference, the 2- to 8-year-old units dropped -0.10%, and 0- to 2-year-old vehicles were stable.

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

Car segments                    -0.06%       +0.27%        -0.14%

Truck & SUV segments   -0.12%       +0.17%        -0.06%

Market                              -0.10%       +0.20%        -0.09%

Car Segments

On a volume-weighted basis, the overall car segment decreased 0.06%. For reference, the previous week, cars increased by 0.27%.

• Only three of the nine car segments increased last week.

• Sporty car continues to climb, but the rate of increase is slowing, with a gain of only 0.39% compared with the average weekly increase of 0.64% over the past 15 weeks.

• Prestige luxury (-0.34%) and near luxury (-0.27%) had the largest declines last week, marking the second week in a row of declines for the segments.

Truck / SUV Segments

The volume-weighted, overall truck segment decreased 0.12% compared with the prior week’s increase of 0.17%.

• Four of the 13 truck segments reported increases last week, the smallest number of segments reporting an increase since the beginning of February.

• Minivans continue to report positive movements, but the rate of increase is slowing, increasing 0.30% compared with the average weekly gain of 0.74% over the past 11 weeks.

• Pickup trucks, both small (+0.10%) and full size (+0.09%), continue to increase, but the gains are slowing.

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.

Calendar years 2020 and 2021 ended with used wholesale prices at elevated levels. With economic patterns, including the automotive market, driven by the pandemic, normal seasonal patterns in the wholesale market, e.g., the 2019 calendar year, were not observed for most of the last three years. We saw a similar picture in 2009 at the end of the Great Recession. Calendar year 2021 did not have typical seasonality patterns, as the market had rapid increases in wholesale values for most of the year. The Wholesale Weekly Price Index reached the highest point of the year at the end of December 2021, reporting over 1.51 points. In 2022, the price index was on a mild rollercoaster until July, after which point, prices were on a continuous decline until the end of the year.

Retail (Used and New) Insights

• Toyota continues to tease us with images of the redesigned Tacoma. The 2024 redesign is set to be revealed on May 19. Toyota has already confirmed that the midsize pickup will have its hybrid i-Force Max powertrain as an option, the same powertrain already available in the Tundra and Sequoia.

• Despite the high interest rates, new-vehicle sales for April were strong, with much of the strength due to fleet sales increasing.

• Lordstown Motors made news last week, saying it was facing financial troubles and citing potential resolutions, such as finding a partner, filing for bankruptcy, and stopping production of the Endurance pickup.

• Volvo’s 2024 C40 and XC40 Recharge variants will be offered in rear-wheel-drive, charge faster, and have a longer range compared to the current model year. The new models will be available in dealerships in the second half of this year.

Used Retail Prices

Used retail prices are more accessible than in years past due to the proliferation of "no-haggle pricing" for used-vehicle retailing. 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, and then began dropping in April, finally hitting a low point in the late spring months. By late summer of CY2020, used retail prices increased as supply of new-ehicle inventory started to become scarce, but retail demand slowed down 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 of 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 once again to start the fourth quarter, when prices on retail listings steadily increased week after week. As CY2021 came to an end, the retail listing price index closed 36% above where the year began. The index then remained relatively stagnant through most of CY2022. In the fourth quarter, Retail Listings Price Index declines started, but were not as steep 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- to 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 reverted back to one at the start of 2023. Currently, the index sits at 0.97 points.

The Used Retail days-to-turn estimate is currently around 50 days.

Wholesale

May began with what seemed to be the tipping point for the market, according to many industry experts; after 12 consecutive weeks of increases, the market turned last week with the first widespread depreciation since early February. Additionally, conversion rates and available inventory, both in OEM and dealer lanes, are also declining. As always, the Black Book team will continue to monitor and report on developing trends.

The Estimated Average Weekly Sales Rate dropped to 49% last week.