Used wholesale and retail prices are starting to stabilize in July (although at a remarkably high plateau), but new car sales are still on a rollercoaster as the chip shortage is finally showing up in the new sales numbers.
Wholesale values continue to decline after a monstrous 22-consecutive weeks of gains; however, sales conversion rates were also down last week. We anticipate that dealers will begin gradually and moderately reducing their floors.
The June Retention Index increased again, although at the slower rate, and broke yet another record, reaching 166.0 points.
Wholesale values are finally starting to simmer down but make no mistake, supply channels haven’t been restored and the market remains strong.
Another week of gains for the exceptionally strong wholesale market; however, that pace has slowed tremendously.
Wholesale prices remain strong, however there are signs of softening in the market this week, as prices of newer used vehicles seem to be hitting a ceiling.
The May Retention Index showed another increase and broke yet another record, reaching 159.6 points, a 7.1 point (or 4.7%) increase from April (152.4).
All nine car segments reported gains last week, however, 0.8% is the lowest weekly gain the overall car segment has seen in 15-weeks.
It is now clear that like 2020, 2021 will also not have typical seasonality patterns as the market is going through a rapid increase in wholesale values.
New inventory is not expected to see improvement until the third quarter of this year, so values are expected to remain at elevated levels throughout the summer.
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