Wholesale Prices: Week Ending December 31st

The year closed out with another week of above average weekly depreciation. With depreciation exceeding the typical yearly rate, values are still well above pre-COVID levels. In positive news, the overall conversion rate at the auctions improved slightly.

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

Car segments                         -0.77%             -0.49%             -0.57%

Truck & SUV segments        -0.80%             -0.34%             -0.57%

Market                                   -0.79%            -0.39%              -0.57%

Car Segments

• On a volume-weighted basis, the overall Car segment decreased -0.77%. For reference, the previous week, cars decreased by -0.49%.

• All nine Car segments decreased last week, with two of the nine reporting declines greater than 1% (Luxury Car, -1.01%; Sub-Compact Car, -1.00%).

• Premium Sporty Car reported the smallest decline at -0.45%. The segment has averaged a weekly decline rate of -0.49% over the last six weeks.

• Luxury Car reported the largest decline for the segment since the first week of November when the segment declined -1.31%.

Truck / SUV Segments

• The volume-weighted, overall Truck segment decreased -0.80%, compared with the prior week’s decline of -0.34%.

• All thirteen Truck segments reported declines last week, with four of those reporting a decline of over 1% (Full-Size Luxury Crossover/SUV, -1.38%; Small Pickup, -1.23%; Compact Crossover, -1.14%; Mid-Size Luxury Crossover/SUV, -0.07%).

• Full-Size Van had another week of small declines. This now gives the segment an average weekly decline rate of -0.16% over the last 20 weeks; in comparison, the Truck segment average weekly decline over the same period is -0.80%.

Weekly Wholesale Index

• Calendar year 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 (e.g., 2019 calendar year) in the wholesale market were not observed for most of the last two 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 where on a continuous decline.

• The graph below looks at trends in wholesale prices of 2-6-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.

Retail (Used and New) Insights

• Last week, Ford announced the horsepower and torque figures for the redesigned 2024 Mustang; 486 and 418 pound-feet, respectively in the 5.0L V8 engine. Their Dark Horse variant will be tuned to deliver 500-hp and 418 pound-feet of torque. In comparison, the EcoBoost variant will deliver 315-hp and 350 pound-feet of torque.

• A London-based automaker, NanoFlowcell, has now set-up its headquarters in New York City, with plans of bringing their electrolyte fuel-powered EV concept to the US.

• The first 2023 Audi Q8 E-tron rolled off the assembly line last week and is expected to get at least a 30% boost in range over the original E-tron that was released in 2018. The vehicle will be available in mid-2023 in both a crossover and sportbackvariants.

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 on-set 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 vehicle 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 the pace once again to start the fourth quarter. In Q4, 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 has remained relatively stagnant through most of CY2022. In the fourth quarter of 2022, the Retail Listings Price Index declined, but 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 graph 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

Used retail active listing volume was consistent at 1.10 last week.

The Used Retail Days-to-Turn estimate is around 46 days.

Wholesale

The week between Christmas and New Year’s is always a toss-up when it comes to market values. Some years see heavy depreciation due to high new car incentives putting pressure on used values and other years see stronger demand for used vehicles as dealers prepare for the Spring market. This year, there are no high incentives on new vehicles, but demand for used remains weak due to low consumer demand as a result of high interest rates. The one bright spot for the week was the small bump in conversion rates at the auction, but that comes with a caveat that overall volume for the week was lower. This is no surprise though, as many consignors are holding their inventory until the new year.

The Estimated Average Weekly Sales Rate increased slightly to 46% last week.