Wholesale auto market declines for 10th straight week

Black Book reports auction inventory up and sales results down, again

It’s normal for wholesale prices to decline this time of year, but this decline is in excess of normal. In addition, in Black Book’s October 4^th Market Insights report, they reported that sales rates, the percentage of vehicles sold decreased, declined while retail inventories rose. Blame some of it on Hurricane Ian, but overall, auction results are not looking good. If repossession volumes are indeed on the increase, this could spell for large losses to lenders everywhere.

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

Wholesale Prices,

Week Ending October 1st

The market continued its descent last week, with the level of decline still exceeding what is typically experienced this time of year. However, the rate of decline did lessen slightly to an overall market decline of -0.77%, after multiple weeks that hovered around -0.90%.

	This Week	Last Week	2017-2019 Average (Same Week)
Car segments	-0.80%	-0.87%	-0.42%
Truck & SUV segments	-0.75%	-0.90%	-0.31%
Market	-0.77%	-0.89%	-0.35%

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

Given the circumstances of Hurricane Ian making landfall last week, and some auction locations temporarily closing, the overall sales rates were lower than prior weeks. Buyer count was still strong and there were competitive bids, but the sellers were still holding onto their floors in hopes that the market will move into positive territory.

With inventory being down last week, this might be why sellers are holding tight to their floors because of the law of supply and demand. Large independent dealers and small franchise dealers dominated the lanes last week and were aggressive in casting their bids going back and forth.

Conditions of these vehicles were not as great as we have seen in the past, and we can hypothesize that conditions might stay the same or get worse as we anticipate seeing some flood vehicles running through the lanes as an effect of the hurricane.

The price of gas has been decreasing since the beginning of July, and it took a turn last week and increased 6 cents. Diesel decreased 7 cents and has been decreasing in small increments since the beginning of September. Overall, we had a week of decreases over all Car and Truck Segments.