Market Insights – 6/6/2023

Wholesale Prices, Week Ending June 3

The market continued to decline last week, down 0.31%. The level of depreciation exceeded pre-COVID norms for this time of year of -0.22%. Sporty car (+0.38%) and full-size trucks (+0.06%) were the only segments to increase last week.

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

Car segments                      -0.26%            -0.11%            -0.31%

Truck & SUV segments     -0.34%            -0.32%            -0.16%

Market                                -0.31%            -0.25%            -0.22%

Car Segments

• On a volume-weighted basis, the overall car segment decreased 0.26%. For reference, the previous week, cars decreased by 0.11%.

• Sporty car was the only segment to increase last week, up 0.38%. The prior week , the segment declined 0.19%.

• Sub-compact car had the largest decline last week, down 0.63%. It was the fifth consecutive week of declines for the segment, for an average weekly decline of 0.39%.

Truck / SUV Segments

• The volume-weighted overall truck segment decreased 0.34%, compared with the prior week’s decrease of 0.32%.

• Only one of the 13 truck segments reported an increase last week.

• Full-size trucks increased 0.06% after the previous week’s decline of 0.24%.

• Compact luxury (-0.67%), sub-compact luxury (-0.62%), and midsize (-0.62%) crossovers reported the largest declines 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.

Calendar years 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 in the wholesale market, e.g., the 2019 calendar year, were not observed for most of the last three 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 were on a continuous decline until the end of the year.

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 onset 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, 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 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 once again to start the fourth quarter, when 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 then remained relatively stagnant through most of CY2022. In the fourth quarter of 2022, the Retail Listings Price Index declines started but were 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 reverted back to one at the start of 2023. Currently, the index sits at 1.00 points.

The used retail days-to-turn estimate is currently around 54.

Wholesale

June has started on a positive note, with auction conversion rates increasing for the first time in four weeks. We saw more buyers in the lanes and online last week than in weeks in prior months. Prices are still moving in both directions, while 1500 series trucks rebounded this week after last week’s dip, other segments continue to see prices following a downward trend. As always, the Black Book team of Analyst will keep their eyes on the market watching for developing trends and insights.

The Estimated Average Weekly Sales Rate increased to 49% last week.