The winter used-vehicle market was softer than same time last year, but since January there has been a strong recovery from the inventory glut that occurred in fall 2001 after the events of Sept. 11.
“Dealers began the year with cautious optimism, but were surprised by the strength of the recov-ery in used-vehicle values and volume,” said Charlie Vogelheim, editor of Kelley Blue Book, a used-vehicle residual guide book. “But they are still concerned about future incentives and their effect on used-vehicle values.” Vogelheim predicts a flat wholesale market in 2002, with the possibility of erosion in residual values should a new round of aggressive retail incentive programs be introduced.
Resale values for mid-size sedans remain soft due to their high inventory in the wholesale market, said Vogelheim. “But what’s surprising is the softening of demand for full-size vans, which traditionally have had a better-than-average retention value.” One reason is the impact of the recession-ary economy on the secondary-use truck market, which is causing many smaller companies, who typically buy these used vans, to tighten budgets and curtail spending.
Full-size extended cab pickups continue to bring good money; however, demand is soft for regular cab models and compact pickups.
“What’s hot is larger engines. This is true not only with trucks, but also cars,” said Vogelheim. “This demand hasn’t extended V-10 and V-12 engines, which, in some cases, bring less value than a V-8. The reason for this is that a buyer looking for this type of power will often buy a turbo-diesel instead. Plus, they are just too fuel inefficient.”
Demand for mid-priced European cars is strong, but residuals for high-end European and domes-tic luxury makes remains soft.
Originally posted on Fleet Financials