Used-vehicles sales volume was better than expected in February, with the strongest sales activity on the West Coast, in Texas, and the Southeast, said Layne Weber, director of vehicle marketing for Donlen Corp., a fleet management company headquartered in Northbrook, IL. "Almost everything is selling and most of it is going over the floor price. There are very few 'if' bids," added Weber. Prices in January were up 5 percent, on average, over what they were in December, however, Weber believes that prices will level out. "I anticipate supply moderating to where demand should be equal or slightly greater, which should make for a pretty decent market." said Weber. "I foresee a strong sell cycle in terms of percentage sold and a decrease in days-to-sell, but I don't see us getting a lot more money for the cars we are selling. Supply and demand will ultimately dictate prices in the wholesale market."
One factor impacting resale prices is that many fleets decide to keep their vehicles in service longer and skipped the fall replacement cycle. "We are seeing older carts with more miles and, as a result, we are seeing a lower price," said Weber. "But the demand for mid-to-low-price cars is really strong. We are hitting our floors and the cars are selling the first time we run them through the auction lane."
The fairly mild winter this year has been helped to fuel the increased sales volume and dealer demand in the wholesale market. "Also, when you look at what happened after Sept. 11, it resulted in the same price decreases that we would normally see in a winter market; however, it just came two months earlier," said Weber. "As a result of this market shift, combined with a mild winter, the spring market started earlier than normal this year in the beginning of February."