2013: Year in Review
As years go, at least with respect to the automotive market, most of 2013 was pretty docile. We had a relatively long spring market that may have been a little less vibrant than many might have wished for, but one that lasted long enough to provide some welcome stability before drifting into an unusually peaceful decline as we moved through summer. What we found a bit unusual, at least for the first two thirds of the year, was a remarkable steadiness to the descent of the market that reached across all segments. It was as if week after week everything moved downward at the same pace. There were very few surprises for much of the year. Had that continued, it would have made for a boring year, but that wasn't to be the case and September woke everyone up with a strong jolt.

We expect a good deal of the yearly depreciation of most vehicles to occur in the fall months. September through November is usually a predictably weak period in the market. December can go a variety of ways. This year we experienced the kind of decline in the final third of the year that I had almost forgotten was possible without some external anomaly like a gas crisis or a financial crisis. It was largely an across the board decline although the European and Asian luxury segment was particularly hard hit. After reviewing the numbers, many segments experienced 45% to 55% of their yearly depreciation during the months of September, October, and November. And most of those segments are continuing to decline through December. Something like a 2010 Mercedes E350 4-door lost about $4200 in value over the course of the year. More than $2500 of that has occurred since the beginning of September, almost 60% of its yearly decline.

That is perhaps an extreme example, but it represents what was a particularly difficult fall market and what stands out from what was otherwise a very peaceful and pleasant year for most of us who like predictability. I'm not sure what precipitated such a market. Usually you can pinpoint either an increase in volume or a decrease in demand or both. I didn't really see an increase in volume, so I suspect lesser retail demand was the culprit. Later model vehicles were particularly hard hit, so it leads us to think that the spike in new vehicle sales (we are approaching the pre-financial crisis levels we have not seen for years) together with leasing levels (we have also not seen in years) have taken a lot of consumers out of the used market and into the new car showrooms.

Whatever the case, the consensus is that 2013 was characterized by a long period of relative peacefulness and gentleness throughout the market before being punctuated by an unusually volatile fall. We look forward to a return to relative calmness as we move into spring.

As always we are conscious of - and grateful for - our partnership with our subscribers and our responsibility to provide them with the most relevant and useful information available. We are always working towards greater relevancy and utility and we anticipate continuing to create enhancements in those areas throughout 2014 and beyond.

Dan Galves



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