Market Insights

Wholesale Prices, Week Ending Aug. 26

Wholesale declines continued last week, but the rate of decline showed some signs of slowing, the overall rate of depreciation falling under 1% for the first time this month. Some dealers are starting to plan for the potential of a United Auto Workers union strike, and that is pushing them to the lanes to ensure they have inventory “just in case.”

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

Car segments                     -0.83%           -1.73%          -0.10%

Truck & SUV segments    -0.87%           -1.43%          -0.14%

Market                              -0.86%          -1.52%         -0.12%

Car Segments

• On a volume-weighted basis, the overall car segment decreased 0.83%. In the previous week, cars decreased by 1.73%.

• The 0- to 2-year-old car segments were down 0.37%, and 8- to 16-year-old cars declined 1.49%, compared with the prior week’s declines of 1.20% and 1.90%, respectively.

• Eight of the nine car segments decreased, three of those with  declines exceeding 1%.

• Premium sporty dar increased 0.46%. The size of the segment is small, and last week’s performance was heavily influenced by strength of the Chevrolet Corvette.

• For the last three weeks, the compact car segment declined more than 2% each week, the largest decline of any car segment during that period, but this week, the depreciation slowed to 1.37%, and the highest depreciation went to the subcompact segment, which dropped 2.10%. Subcompact car has now averaged 1.59% depreciation per week over the past four weeks.

Truck / SUV Segments

• The volume-weighted overall truck segment decreased 0.87%, much less than the depreciation in the prior week, of 1.43%.

• The 0- to 2-year-old models declined 0.73%, while the 8- to 16-year-olds declined 0.95%.

• All 13 truck segments declined, five by more than 1%.

• The full-size crossover/SUV segment had the largest decline, down 1.49%. The segment has averaged a weekly decline of 1.50% over the past four weeks.

• Full-size pickups had a couple of weeks of large declines, primarily driven by drops in the 1500 series trucks, but the rate of decline slowed last week to 0.57%.

• Compact and full-size vans continue to have the lowest depreciation, declining 0.39% and 0.46%, respectively, last week.

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.

Used Retail Prices

Used retail prices are more accessible than in years past due to the proliferation of no-haggle pricing. 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, then began dropping in April, finally hitting a low point in the late spring months. By late summer of CY2020, they increased as supply of new-vehicle inventory started to become scarce, but retail demand slowed 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 2021 started the dramatic increases in 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 again to start the fourth quarter, when they steadily increased. As CY2021 came to an end, the retail listing price index closed 36% above where the year began. The index remained relatively stagnant through most of CY2022. In the fourth quarter of 2022, the Retail Listings Price Index started to decline, 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 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 currently sits at 1.02 points.

The Used Retail days-to-turn estimate is currently hovering above 51.

Wholesale

For four weeks in a row now, the market has shown heavy declines in both the car and truck segments, but last week, declines started showing signs of slowing. With increases in no-sales seen last week, buyers are showing signs of being more cautious about the uncertainty of the wholesale market. Other factors contributing to the heavy declines include high fuel prices and interest rates continuing to rise. Now, with a looming UAW strike, which could potentially reverse the downward trend, no one seems to know what to expect next with the coming weeks' results.

That’s why here at Black Book, we have our team of analysts focused on keeping their eyes on the market, watching for developing trends and insights.

The estimated average weekly sales tate declined to 48%.