Used-vehicle resale values in the wholesale market continue to be soft with fall prices down as much as 20 percent for some models compared to same time last year, said Layne Weber, remarketing manager for Donlen Corporation, a fleet management company headquartered in the Chicago suburb of Northbrook. “To put it in perspective, these prices are compared against the post-Sept. 11 used-car market, which was abysmal,” added Weber. Likewise, resale values for pickup trucks, which have been perennially strong, are down, on average, approximately seven percent. Although resale values for minivans are flat when compared against fall 2001, wholesale prices at that time were also severely depressed. However, resale values for large compact sedans, especially those with fewer than 50,000 miles, are holding steady with some models such as the Malibu and Stratus commanding better than average prices, said Weber. A variety of market forces are exerting downward pressures on fleet resale values. “The biggest factor is supply and demand,” said Weber. “Although there is not a big imbalance, currently supply is outstripping demand, which is why prices are down.” Another factor is new-vehicle incentives. ”Although new-vehicle incentives do not directly affect fleet resale values, indirectly they do because prices have to be proportional between the different segments in the used-vehicle market,” said Weber. Weber predicts that resale values in 2003 will remain flat. “For the past three years we have been experiencing deflation in the used-vehicle market. Each year, resale prices were lower than the preceding year,” said Weber. “I can’t say that the market has bottomed out, but I am optimistic that deflation will not continue in the long-term.”

Originally posted on Fleet Financials

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