How Will the Fiscal Cliff Agreement Affect Used Vehicle Prices?

After nearly two months of political wrangling, Congress finally reached a last-minute agreement late Tuesday evening to avoid sending the U.S. economy cartwheeling over the so-called “fiscal cliff”, the series of broad-based tax increases and automatic cuts to government spending that were borne from the deficit reduction agreement (a.k.a. the Budget Control Act) reached back in August 2011. While the agreed upon legislation – entitled the American Taxpayer Relief Act of 2012 – is too modest to reduce the federal deficit in a meaningful way and essentially kicks the more contentious debate ...

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The Honda Civic: If it Ain’t Broke, Go Ahead and Fix it Anyway

After only one year of production, the recently redesigned Honda Civic has already gone under the knife for the’13 model year to give the entire vehicle a major refresh. Enhancing a vehicle this early in its product lifecycle could usually be chalked up to poor sales, but quite the opposite has happened with the Civic. Through the first 11 months of this year Honda has managed to sell almost 285k new units, more than any other car in this segment and 31k more units than second place Toyota Corolla. Looking back over the course of the past five years, the Civic has always landed on top of the ...

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2012 L.A. Auto Show: Observations from the City of Angeles

The Los Angeles Auto Show opened this week kicking off the start of the auto show season here in the U.S. and as is the norm, industry professionals and members of the press were given the opportunity to ogle, feel, and critique the latest offerings from manufacturers before the doors of the L.A. Convention Center were opened to the public. While there is much to point out after two days of press conferences, jockeying for position on a crowded stage to take a decent photo, and what seemed to be multiple miles walked between the south and west halls of the convention center, but there were ...

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Mid-Month Update: Used Prices Remain Essentially Unchanged

Wholesale used vehicle prices over the first two weeks of November were noticeably stronger than what is normally seen for the period as prices remained essentially unchanged from October’s levels.  From July through September, monthly depreciation averaged just 2.0%, and October’s fall of 2.3% was decidedly better than the month’s 3-to-4% historical average.  November appears set to improve upon this trend as wholesale prices have fallen by a barely noticeable 0.1% compared to October, which is a significant improvement over the 2-to-3% average fall for the month. Prior to Hurric ...

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Hurricane Sandy Assessment

The East Coast is still dealing with – and trying to assess the damage from – “Superstorm Sandy”, the historically destructive hurricane/nor’easter that hammered Mid-Atlantic and Northeastern states a little over a week ago. By now, most of us are well-versed in the immediate devastation imposed by Sandy; at least 110 Americans perished, over 8 million were left without power and massive flooding led to the heart-breaking destruction of perhaps hundreds of homes residing in low-lying areas.  The human cost associated with Sandy and its emotional impact on the lives’ of those who lo ...

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The Replacement for Displacement: Rise of the Turbocharged Engine

Over the course of the past few years there has been a significant push by many automobile manufacturers to abandon the use of larger displacement engines in favor of smaller, more fuel efficient turbocharged variants.   The biggest driver behind the recent displacement downsize has been an effort to raise average fuel economy. Sure, it’s easy to increase efficiency by sacrificing horsepower and torque, but in order to maintain the high levels of performance that we have all grown accustomed to the utilization of turbocharged power plants is being used to fill the gap. Recently the ...

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Mid-Month Update: Used Depreciation Ticks Up; Typical Fall Softness Setting In

Market prices for all NADA segments declined by an average of 2.1% through the first half of October or just over a half-percent more than the 1.5% fall recorded over the first half of September. The increased rate of decline observed through the two weeks of October is normal for this time of the year when progressively softer prices are usually recorded through the better part of a given fourth quarter before prices pick back up again as the New Year approaches.   Downward new market price pressure stemming from 2013 model year redesigns of four of the segment’s top five selling mo ...

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Incentive Spending: Moving Progressively Lower

Those in the industry know that excessive manufacturer subvention of new vehicle prices was one of the most corrosive factors affecting used vehicle prices for the majority of the last decade. This was particularly true for domestic OEMs as they pushed production to compensate for legacy obligations. The immense sums of cash spent on incentives and non-product development-related expenses meant that domestic models ultimately brought to market were at times at a competitive disadvantage to their import counterparts; this of course meant that additional subvention was necessary to encourage a ...

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New Vehicle Spotlight Ford Escape: New King of the CUV Segment?

For the October edition of our Guidelines we’re going to take a closer look at the entire ultra-competitive compact utility vehicle segment, but for this blog we’ll focus primarily on the new Ford Escape. Currently Ford’s compact CUV is at the top of this segment and from the looks of things, Ford might have the perfect recipe for segment domination moving forward. Having sold essentially the same vehicle for the past 12 years, Ford finally redesigned the Escape for the ‘13 model year. It’s no secret that this platform was long overdue for a makeover, but considering its archaic design it’s ...

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Equity Growth Promoting the Release of Demand

In this month’s edition of Guidelines we included an article on the current state of used vehicle demand, and in it we discussed how multiple signs – retail sales, price growth, and intention indicators – point to continued, albeit slowing, growth in this area. We believe that one of the factors supporting demand is the positive equity position that consumers find themselves in with their current vehicle. It’s common knowledge, at least in the industry, that used vehicle prices have been on the rise and that depreciation has slowed over the course of the past four years because of deteri ...

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