Wholesale Prices Remained Stable Throughout Summer
By Mike Antich
Wholesale prices for used fleet vehicles were stable from June through August. “Although consignment volumes were down, prices and days-to-sales were almost unchanged,” said Layne Weber, VP, remarketing, Donlen Corporation, a fleet management company in Northbrook.
One reason for this stability is the lower volume of inventory at auction, which has caused buyer demand to increase. “The decreased volume has caused the percent of units sold first time through the auction to in-crease.” During the summer, the strongest wholesale market was in the Southeast, in particular the corridor stretching from North Carolina, Alabama, and Mississippi.
One concern about future resale values has been the sudden increase in interest rates to finance used vehi-cles. Used-vehicle financing almost doubled from July to August. “Interest rates went from the upper 3s and lower 4s to 5.8 percent to 6.0 percent on most loans,” said Weber. One benefit is that higher interest rates could prompt consumers to buy less expensive fleet vehicles.
Weber foresees new-vehicle retail incentives continuing at their current levels into the 2005-model year. “As long as new-vehicle prices stay down, so will resale prices,” he added. In the long-term, Weber is opti-mistic about residual values because of the number of all-new vehicles in the product pipeline. “These new models, along with the crossover segment and hybrids have a real potential to help increase used-vehicle prices,” said Weber. “However, there is a lot of uncertainty in the market. As we know, an unanticipated eco-nomic or political upheaval could dramatically impact both new- and used-vehicle sales. If things continue as-is, then used-vehicle prices will increase, but there are a lot of wildcards out there.”