Convoluted, complicated and difficult all might be appropriate adjectives to describe what’s happening in the auction lanes nowadays.
While Black Book is seeing an ever so slight deceleration in the upward trajectory of wholesale prices, analysts also pinpointed a handful of specific models in which dealers actually are being forced to pay above MSRP for a used version because of supply constraints.
“Driven by an extreme shortage of rental returns and limited inventory of new vehicles, the price trends of newer used vehicles were experiencing larger weekly gains compared to the older units,” Black Book said in the newest installment of Market Insights released on Tuesday.
“Within the last three weeks, newer used units reached levels that, in some cases, exceed new-car pricing while the rate of growth has slowed for older units,” analysts continued in the report.
“For example, in addition to Ford F-150 Raptor, 2020-21 Chevrolet Corvette and 2021 Jeep Gladiator and Wrangler, dealers are paying above MSRP for 2021 Kia Telluride and Hyundai Palisade, as well as other mainstream models,” Black Book went on to say.
For used-car managers who can’t stomach the thought of paying that much for a current-model-year unit, perhaps they can go to the dealer-consignment lanes to find inventory that could turn quickly.
However, Black Book cautioned dealers not to expect to find many bargains.
“Available inventory on dealer lanes has improved in recent weeks, as more dealers are taking their trade-ins to auction to take advantage of the strong wholesale demand,” Black Book said. “Despite the low inventory on the lots, the margins that can be made at their local auction is too good to pass up.
“With the ongoing new-inventory shortage, the availability of used units is expected to remain tight throughout the summer, especially with rental and fleet companies holding their units in service longer until replacements are available,” analysts continued.
“New inventory levels are not anticipated to recover until 2022 due to the ongoing supply-chain issues,” Black Book went on to say.
So, buckle up, dealer friends. Climbing price points like these are continuing to be seen by Black Book’s analysts.
Black Book reported that car segment value gains slowed this past week, increasing 1.17% after the week prior came in at 1.71%. Analysts also noted that for the first time since middle of March, all nine car segments did not generate price jumps exceeding 1% and none of them broke the 2% mark.
Still, the average weekly value increase for compact cars during the past seven weeks is a “staggering” 2.17%, according to Black Book.
Analysts also pointed out the latest price rises by full-size cars (up 0.99%), luxury cars (up 0.83%) and prestige luxury car (up 0.62%) are still well above normal seasonal changes.
Black Book noticed that prices in the truck segment didn’t rise as much this past week (up 0.89%) as they did when compared to the previous week (up 1.07%).
Analysts noted that while all 13 truck segments posted value increases, only four surpassed 1%. That’s down from the week prior when nine truck segments generated at least that much of a rise.
Prices for small pickups had jumped by at least 1% for eight weeks in a row, but last week that streak stopped with a gain of 0.94%. Black Book added that values full-size pickups climbed another 1.11% last week.
“Wholesale values continue to rise, but the rate of increase is shrinking each week. However, the value increases are still considered extremely large for single week gains compared to a ‘normal’ market,” Black Book said.
“Retail inventory levels — new and used — continue to be a challenge and the limited availability of quality vehicles in the wholesale market is also proving to be a challenge for buyers,” analysts went on to say.
Source : AutoFinanceNews
