Small Car Prices Begin their Descent

It’s funny that $3.50 is a welcome sign of lower gas prices when at one time the industry talked about $3.00 gas as a tipping point for truck and SUV demand.  The decline in gas prices has been dramatic, falling from a high of $3.99 in May; however consumers are still paying over $.80 more per gallon compared to last year’s prices.  With the new perception that gas prices at or above $3.00 is an acceptable price, are we now in a situation where demand for small cars will continue to be strong, and consequently the used prices will remain well above historical levels?  The dramat ...

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New vs. Used Payment

Auction prices on passenger cars this week continued to follow a gradual decline from the peak prices reached during early June.  The view from the peak has been amazing; wholesale prices on many passenger cars still hover at 25 – 30% over last year’s prices, which is great for stimulating new car sales.  Industry pundits, NADA included, are forecasting depreciation throughout the remainder of the year, but not at a rate that will significantly change the gains we have experienced year over year.  In fact, most consumers will remain with a strong equity position on their used tr ...

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Supply Impact on Price

We’ve frequently stated that lower used vehicle supply has played a critical role in keeping used vehicle prices high over the past two years.  However the supply of vehicles being wholesaled through physical auctions has experienced even sharper declines than the market as a whole, and as a result wholesale auction prices continued to reach record levels during May and into early June.  While we have likely reached a peak in used prices for a variety of reasons, NADA does not expect prices to decline dramatically which is an assumption that is supported in large part by supply da ...

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Politics & the Automotive Industry

I read a quote this week that made me start thinking about all the political banter surrounding the automotive industry.  The quote went something like this: “In retrospect the situation was very predictable...”  The context of the quote was not automotive related, but made me think of what scholars have dubbed hindsight bias, which basically explains that when one  looks at anything retrospectively it creates false confidence that  a situation was easily predictable when it occurred  even though the event was very complicated at the time.  This quote is ver ...

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May Sales could have reached 12.6M

The doom and gloom in the press was getting me down, so I decided to find some solace by searching for a silver lining among all of these dark clouds.  The used market is one; prices are high, demand is strong, and more consumers can view their automobile as an asset and not a liability.  On a more theoretical level, David Wagner, NADA’s Senior Manager of Analytics, provided some other encouraging data that helped improve my day.  The month of May's new vehicle sales were disappointing and when thrown into the cauldron of other bad news (unemployment, consumer confidence, etc. ...

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Springtime Blues

The fragile state or our economy was exposed in May with virtually all indicators showing signs of weakness.  Housing prices according to the S&P/Case-Shiller index dropped 4.2 percent during the first quarter. Consumer confidence dropped, retail sales did not live up to expectations and gasoline prices remain very high.  All these factors contributed to a cautious, if not negative situation for demand, and the new vehicle sales pace suggested some hesitation in consumers for purchasing automobiles with the SAAR tracking under 12M for the first time since September of last year.& ...

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Back to the Basics - May Sales Don't Dissapoint

Reading the latest headlines for May sales suggests the automotive market is starting to shows some signs of decline.  However, May new vehicle sales are doing exactly what supply and demand dictated them to do.  I always find it refreshing that my Economics 101 class came in handy.  In this case, as expected, prices on new vehicles increased due to a lower supply of new vehicles caused by the production declines from the earthquake in Japan.  As we all know as prices increase quantity demanded decreases,  and presto, new car sales have declined to an expected 11. ...

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Oil Prices and Car Deals

The seemingly endless increases on prices for cars is creating some concern on when the market is going to peak. How does a consumer, dealer and lender protect themselves in an extremely volatile automotive market and make the right decisions from a long-term standpoint.  Anyone familiar with the used vehicle market knows that rapid price movements are not uncommon. The past 3 years have proven this and 2011 is no different.  Manheim’s Used Vehicle Value Index confirms this with the index hitting an all-time high in April.  Predicting the direction of used vehicle ...

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How Much Risk Are in Truck Prices

Truck and SUV used price performance has been impressive. Trucks and SUV prices have reached record levels and have followed an upward trend since the last gas spike in 2008, which drove truck and SUV prices to record lows. The upward trend in gas prices which essentially began in January 2009 and accelerated late in 2010, surprisingly has not had a significant on prices.  There is no doubt that the recent increases in gas prices have slowed down the appreciation on values for trucks and SUV’s, but we haven’t seen a consistent decline in truck prices until recently…since mid-March trucks ...

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Used Car Prices Continue to Heighten

Used prices on compact cars have continued to move upward in April driven by a rapid rise in gas prices and higher new vehicle prices (supported by tighter inventory from the earthquake and tsunami in Japan).  NADA’s adjustments to Used Car Guide values through the May edition accounted for this upward swing; however, used prices through May might eclipse NADA’s value forecasts due to a greater than anticipated increase in gas prices.

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