Wholesale auction market value slide continues

Black Book reports repossession inventory up and values decline for eighth straight week

In Black Book’s September 27^th Market Insights report, it was reported that both the wholesale market has been in a nine week decline while at the same time, inventories are on the rise. Is the wholesale auction market returning to normal or is the beginning of rising trend in repossession inventory?

Below are some highlights of Black Book’s weekly market insights report;

Market Insights – 9/27/22

Wholesale Prices, Week Ending September 24th

Larger than normal market declines have continued for nine consecutive weeks. Sales rates are some of the lowest we have seen in a long time and available inventory in many of the lanes is down, particularly for those sellers that heavily rely on direct purchase from consumers.

	This Week	Last Week	2017-2019 Average (Same Week)
Car segments	-0.87%	-0.89%	-0.34%
Truck & SUV segments	-0.90%	-0.91%	-0.22%
Market	-0.89%	-0.90%	-0.27%

Weekly Wholesale Index

Calendar year 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 (e.g., 2019 calendar year) in the wholesale market were not observed for most of the last 2 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 the majority 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.

The graph below looks at trends in wholesale prices of 2-6-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.

Wholesale

Even though sales rates continued to decrease, the buyer count was stable. Buyers were in the lanes but were not willing to pay higher prices in hopes that prices are still coming down. Rental companies seemed to make more of an appearance last week and were very competitive with the large independent dealers.

Smaller franchise dealers were not as active but got in when they could to drive the competition. With fall coming up, we can anticipate sellers holding onto their floors in hopes that they will see an increase in the market.

There were some model year 2023 vehicles that ran in the lanes which could possibly mean that more will be coming soon as manufacturers are continuing to move forward with production.

Inventory was on the lower end last week, which could possibly be why there were not as many If sales as we have seen in the past and why sellers are not wanting to negotiate. Overall, wholesale values still had significant decreases.