The Car and Truck Fleet and Leasing Management Magazine

Uncertainty in Wholesale Market Keeps Prices Soft

June 26, 2003

The percentage of intermediate-size fleet vehicles sold at auction in May was over 70 percent; however, their resale prices were down approximately five to 10 percent when compared against the same time last year, said Layne Weber, director of vehicle remarketing for Donlen Corporation, a fleet management company headquartered in Northbrook. “There are still a lot of uncertainties in the market,” he said. Weber anticipates a normal seasonal drop in resale prices this summer, but he expects the drop to be steeper than what it was last summer. One reason is that certain vehicle segments are experiencing a temporary oversupply of units in the wholesale market. “For instance, we have seen a bigger than normal decline in truck prices,” said Weber. “Normally, we don’t see a lot of seasonality in truck prices. Work trucks tend to depreciate closer to a straight line, with the decline corresponding to the age of the vehicle. But this year, we’ve seen a fall in truck prices greater than what we anticipated.” In addition to the oversupply of units in the marketplace, Weber also cites the current economy as another contributing factor to the price decline. “In the past, one of the reasons why truck prices were so strong was because there were more buyers than work trucks in the wholesale market,” added Weber. Looking ahead to the 2004-model year, Weber anticipates that resale prices during this timeframe will mirror what the industry experienced during the 2003-model year. “We have had three straight years of year-over-year declines in resale prices. My prediction is that prices will bottom out in 2003. My other prediction is that we may see an increase in prices in the 2004 calendar-year compared to what we’ve seen in 2003.”
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