LAWRENCEVILLE, Ga. –
Black Book analysts made the connection of how federal stimulus payments and enhanced unemployment benefits given during April and May combined with limited used-vehicle inventory combined to create the highest weekly appreciation “in recent history.”
According to Black Book’s newest COVID-19 Market Update released on Tuesday, overall car and truck segments values both generated gains for the fourth week in a row, increasing 1.27% overall.
Black Book’s volume-weighted pricing information for both cars and trucks revealed value hikes last week much higher than a week earlier. Analysts said overall car segments increased by 1.54% (compared to 0.88% the prior week) and the overall trucks and SUV segments increased again this past week at 1.11% (compared to 0.52% during the prior week).
Specific vehicle segments generating the highest value increases included compact cars (up 2.29%) and small pickups (up 2.89%).
“Both the small pickup and compact car segments experienced very large depreciations at the onset of the pandemic but have been consistent in the rebounding of prices week after week,” analysts said in the latest update.
“Minivans also had a second week of increasing prices at 2% after 11 consecutive weeks of declines,” Black Book added.
Despite the value increases, Black Book described auction activity this past week as “on fire” with high conversion rates and high sale prices.
“Most no-sales this past week were the result of sellers holding firm to floors and not due to a lack of demand by the buyers. As a result, buyers are having to pay top dollar to secure quality inventory,” analysts said.
Meanwhile, Black Book highlighted that dealers are enjoying strong used-vehicle sales overall so far this month. However, the success of retailing those used vehicles is creating problems for managers in finding replenishment inventory.
“The lack of repossessions, delayed lease returns and staffing limitations at the auctions are all contributing to low inventory levels at the auctions,” analysts said. “The estimation is that it will be at least two more weeks before we start to see an increase at many auctions around the country.”
Black Book then addressed what could be a path of quality used-vehicle inventory — rental risk units. But just like so many other business tasks during the coronavirus pandemic, getting those vehicles through the wholesale industry is easier said than done.
“Although we see some recovery in rental demand (outside of airport business), we measured a substantial increase (compared to previous weeks and compared to last year) in volume of rental units sold, as rental fleet companies are beginning to de-fleet and reduce their fleets to match much weaker consumer and business traveler demand,” Black Book said.
“As the supply continues to grow, we are concerned with the throughput at major auctions as they continue to operate with reduced staff,” analysts continued. “In our continuous conversations with management teams from major auction chains, they report that they are trying to execute on the increased volume and customer demand without immediately bringing back significant amounts of furloughed staff.
“There is a concern that this uptick may be short-lived and the need for increased staff may be temporary,” Black Book added.