Spring Prices Are Up 5-10%, But Values Still Low
Wholesale transaction prices remained steady this spring following seasonal price increases of five-to-10 percent that occurred in early January. “However, this is in comparison to the same time last year when prices were at historically low levels,” said Bill Cieslak, director of vehicle operations for PHH Arval, a fleet management company in Hunt Valley.
Also, an oversupply of mid-size fleet sedans and minivans existed in the spring wholesale market, added Cieslak. As with the past several years, demand for minivans remained soft due to over-supply and high retail incentives on new products, which prompted many consumers to buy new since their monthly payment was often comparable to a used one.
“On the other hand, there has been an under-supply of fleet trucks and imports in the wholesale market,” added Cieslak. Truck demand remains strong, but retail incentives on new models are exerting downward pressure on resale values.
Inclement weather also influenced used-vehicle sales in the February and March timeframe. In some cases, it actually spurred sales as many marginal vehicles succumbed to the harsh weather, forcing these owners to buy replacement used-vehicles.
As new-vehicle sales slowed in February and March, the volume of trade-ins, likewise, tapered off, said Cieslak. As a result, more dealers used auctions to fill out their used-vehicle inventories.
Cieslak foresees the wholesale market remaining soft throughout 2003, with the degree of the softness contingent upon the level of retail incentives that manufacturers offer this summer. “The good news is that used-vehicles prices have declined to the point where they are under-valued. As the market stabilizes, this hopefully will create pressures to increase resale values,” said Cieslak.
By Mike Antich