Dealer demand for fleet vehicles in the wholesale market for the fourth quarter has been steady, and the seasonal drop in prices was lower than anticipated due to the leaner inventory of vehicles in the marketplace.
“Prices dropped one to two percent. We did not see the significant seasonal drop in prices that we did the year prior,” said Paul Seger, VP of asset remarketing for GE Fleet Services. “A key reason is that vehicle inventory is definitely down from last year. Many of the large consumer lease portfolios have been run down and you don’t see 200 to 300 of those cars running in the next lane over.”
However, minivans continue to be in high inventory and, as a result, resale prices continue to be soft. Compounding this has been an ongoing shift in consumer preference away from minivans to SUVs and crossover vehicles. But most other vehicle segments performed well in the fourth quarter. “Demand for low-mile, clean cars was off the Richter scale,” said Seger. “However, those units with excess miles and off-colors, such as maroon, continued to be a challenge.”
Light-duty trucks, especially those equipped with V-8 engines, were in high demand. Also, crew cabs and extended cabs commanded a premium due to the low quantity of units in the market. In addition, SUVs, especially 4x4s, were selling well, as they traditionally do in the winter market and snow belt areas.
“The Western U.S. continues to command a premium in both prices and buyer demand, but we also saw pockets in the Midwest, particularly in large metro areas, that were especially strong for domestic-make models,” said Seger.
Seger believes the used-vehicle market is entering a cyclical upswing. “The economy is doing better, and I think this upswing will last throughout 2004. Everything is trending the right way.”