Ed Bobit's Publisher's Page

After our comments last month on the lack of dependable data immediately available regarding effects of new influences in the used car market, and our summation of predictions by the "experts," indication a mean-type overage loss of $50 to $100 in two-year-old cars, we now find something akin to desperation in the resale market place.

During the past month we have seen a substantially larger decline in two-year-old car values. We have seen fewer cars being sold at auction. We have seen the nation's largest fleet-minded wholesalers shun bidding or involvement until "after it all settles down."

We have even found indecision on the part of rental, leasing, and fleet companies as to whether they should move now on purchases (the new cars are a buy, but what about the used one) or wait until the excise tax reduction and freeze measures are resolved, so that they can see the ultimate result on the used car market.

The buying and selling decisions made in October, November, and December by volume fleet buyers can make the difference between saving or losing millions of dollars. Obviously it is a period of utter frustration for all concerned, and again points up the crying need for better methods to research and predict used car values when new elements enter into the marketplace.

Industry leaders with the respective associations might well consider formulating a workable solution to this problem along with their continued efforts on legislation, safety, and personnel training.

The domestic auto makers are continuing to scratch their respective heads in a effort to decipher the apparent charisma of import cars on our market. Entries by U.S. companies are beamed directly at the VW, Toyota, et al, but the imports are not fazed by this American onslaught.

The import market keeps growing with the only deterrents being dock strikes and lack of production availability. Even the new additional 6.5 percent surtax (totaling 10 percent) apparently will not make a difference in the popularity of foreign models. The major importers have strong distribution with good facilities at dealerships, and are improving their positions each day. Their dealers are simply no getting the number of units they need for waiting retail grosses, a situation that domestic dealers remember from the days of World War II.

It may be interesting to watch developments during the next two years when the majors are assured of greater availability, along with their own inflationary increases in labor rates and the possibility of additional surtax increases.

Should the importers reach that point where retail approaches the saturation level, they have indicated that they will turn to the fleet business. Even today, a number of rental operators are willing to pay near retail tabs for these cars, especially where they are particularly popular (i.e. California) or can be used for price leaders on the daily rental sheet and in advertising.

While original purchase price, resale and a "buy American" attitude may still be influencing factors, it might be quite interesting to see it a percentage of American salesmen will choose a foreign make if given the opportunity.

There seems to be little doubt that the imports do, in fact, represent a future threat to the car fleet market as we know it today. Availability can be predicted to change the marketing strategies for anyone's market.