BLACK BOOK – Wholesale Prices, Week Ending October 2nd

Wholesale prices continued to increase last week for a fifth consecutive week. Twenty-one of the twenty-two segments we track reported week-over-week increases. Full-Size Vans continue to skyrocket, increasing thirty-five out of the last thirty-six weeks.

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

Car segments                        +0.64%         +0.57%             -0.42%

Truck & SUV segments       +0.47%         +0.43%              -0.31%

Market                                +0.53%         +0.48%              -0.35%

Car Segments

• On a volume-weighted basis, the overall Car segment increased +0.64%. For reference, the previous week, cars increased by +0.57%.

• Eight of the nine Car segments reported gains last week, with Premium Sporty Car being the only segment to decline by a minimal -0.01%.

• Again, this past week, Mid-Size (+1.04%) and Compact (+0.95%) Car segments reported the largest gains, increasing by a larger amount than the prior week’s already large +0.86% and +0.83%, respectively.

Truck / SUV Segments

• The volume-weighted, overall Truck segment increased +0.47%, compared to previous week’s increase of +0.43%.

• All thirteen truck segments reported gains last week.

• Full-Size Trucks had a third consecutive week of increases, with the segment increasing +0.20% after the prior week’s increase of +0.03%.

• Full-Size Vans (+1.26%) have now increased for thirty-five out of the last thirty-six weeks for an average weekly gain of 0.55%. The microchip shortage has forced OEMs to prioritize full-size truck and SUV production over this highly demanded segment, causing competition for these vehicles to continuously increase.

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 a positive movement once again and reached the highest point of the year last week.

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

Retail (Used and New) Insights

• Q3 sales data is beginning to roll-in, and as expected, the chip shortage has negatively impacted sales for many of the manufacturers.

  • General Motors reported year-over-year sales were down 33%. VW, Nissan, Stellantis, Subaru, and others also reported declines in sales.

  • There were a few bright spots in the sales reports with Hyundai and Toyota both reporting gains. Now that Genesis has more SUVs in their portfolio for 2021, their sales have seen incredible growth, 301% in Q3.

• In some positive news for new inventory, General Motors announced that this week nearly all their North American plants will resume production. Some plants have sat idle since May due to the microchip shortage.

• Lucid Motors began production of their all-electric sedan, named the Lucid Air. It will have a starting price of $77,400 for the entry level Pure trim, but the initial vehicle to come to market will be the Dream Edition with a starting price of $169,000.

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. In June, retail prices continued to rise at a slower rate. After strong increases during the Spring and early Summer, retail listing prices have stabilized at around 25% above where we started the year with some signs of upward movement in the recent weeks.

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

Inventory

Used Retail

Current used retail listing volume is about 16% below the start of the year. Used inventory is now starting to decrease again due to a slowdown of trade-ins and lease returns.

Days-to-turn for used retail listings have been increasing, as retail demand softened over the last few weeks. The days-to-turn now sits just above 34 days, which is still lower than what is typically expected in a normal year.

Wholesale

With the lack of availability of new vehicles continuing to cause inventory problems for large rental companies, they are turning to the auctions in an attempt to secure what little used inventory is being offered for sale.

The overall wholesale market for 2-8-year-old vehicles increased by +0.53% last week, and 0-2-year-old increased +0.57%, resuming the trend of the newer used units increasing by a larger amount.

Unfortunately, due to the pandemic, another year of the annual NAAA conference was canceled. The cancelation, however, didn’t stop the association from passing the gavel to their newest president, Charles Nichols.