LAWRENCEVILLE, Ga. –
Fall’s arrival appears to be bringing welcomed relief for independent dealerships looking to build their inventory. Black Book explained why through its latest COVID-19 Market Insights released on Tuesday.
Analysts recapped in the report, “This past week, we saw more independents being the successful bidder. This is a welcome sight as we’ve talked to so many buyers that struggled over the summer to compete with the money the larger buyers were willing to spend to secure inventory.”
Not only are those larger buyers such as CarMax and Carvana easing back, Black Book is seeing that independent stores and dealerships in general aren’t having to dip into the floorplan funds as much for wholesale units.
According to volume-weighted data, analysts determined that overall car segment values decreased 0.66% over the last week. That decline nearly doubled the figure Black Book recorded during the prior week when car values softened by 0.37%.
Analysts also pointed out that the smallest car segments — compacts and subcompacts — sustained the largest value drops, falling by 1.59% and 0.92%, respectively. Black Book explained the reason for the movement of these particular units by saying, “demand has softened in recent weeks with new inventory increasing and consumers continuing to shift their preferences to crossovers.”
Meanwhile in the truck world, overall truck segment values (including pickups, SUVs and vans) declined by 0.19% last week, according to Black Book’s volume-weighted data. It was nearly a carbon copy of the prior week decline in truck values, which was 0.18%.
However, value declines for subcompact crossovers and subcompact luxury compacts far exceeded the overall reading, dropping by 1.17% and 1.39%, respectively. Black Book said, “Fuel prices remain low, so these fuel-efficient segments are being passed over by consumers for the larger compact and midsize segments that provide more utility and passenger space.”
Analysts also extended the ongoing dialogue about full-size trucks since their upward value moves “continued to lose steam.” Values for these units rose by 0.54% three weeks ago, followed by a 0.12% rise two weeks ago. Last week, values of full-size trucks ticked up by just 0.02%.
“At the auctions last week, it was observed that some trim levels showed weakening in values, and it is expected that this will continue into this week,” Black Book said.
“However, new inventory remains low so it is not expected that values will experience large declines until new supply increases,” analysts added.
Black Book wrapped up its latest wholesale observations by recapping conversations that analysts and other lane representatives had with consignors.
“Sales results continued to be mixed this past week with some sellers adjusting floor prices and ready to move their inventory and others holding firm to floors and willing to experience high no sale rates,” analysts said.
“In particular, the luxury sellers are holding firm to floors and seeing sales rates falling in the 20% range. Full-size trucks and large SUVs continue to bring strong attention on the lanes,” they continued.
“Many remarketers we are talking to are letting us know that they are short on inventory and are prepared to ride out the traditional fall softening in the market,” analysts went on to say. “The only big adjustments they are making to floors are in their older, rougher inventory and on sedans where demand is low.”