Last updated Monday, December 5, 2011
Market Regaining Stability
After a relatively steep descent and bumpy landing, most used vehicle market segments seem to have stabilized in recent days. This time of year often brings some stability after a fall market that typically consumes an inordinate amount of most vehicles' annual depreciation. Our best guess is that the period between Thanksgiving and the year end holidays sees limited inventory as industrial sellers take their foot off the accelerator anticipating (perhaps wrongly) a weak market and buyers seize what they see as an opportunity to build inventory in advance of an anticipated late winter, early spring market spike. Whatever the reason, this time of year often brings a favorable supply/demand ratio and a welcome respite from a more volatile and unpredictable fall market.
We've been saying for a while that those vehicles most affected by the combination of the fuel price spike and Japanese tsunami have come back to earth over the last couple of months - '08 Honda Accord LX 4drs., for instance, have dropped $2300 since their peak- and they seem to have stabilized at last. Conversely, a vehicle like an '08 Suburban LT has risen $1000 since bottoming out due to the fuel price spike, and those kinds of vehicles, domestic SUVs and pick-ups, seem to have stabilized as well.
Luxury Market Bears Watching
We still feel that those vehicles that bear closest watching as we move through the holiday season are the European and Asian luxury segment, cars and trucks. They remain in reasonable supply and demand is always iffy at this time of year. Those that are unique and exceptional in some way will still attract attention, but those that are run-of-the-mill can get very lonely on the block.
Good price range vehicles remain scarce and do well. Sport coupes and convertibles where winter weather is a factor are difficult unless they are truly exceptional. Not unexpected at this time of year.
"Market Phobia" Not An Issue
We have not yet reached that time of year, and we may not this year, where all but exceptional and/or scarce vehicles suffer from what I call market phobia: a largely irrational fear of the market that causes one to value a vehicle significantly under a book value no matter how low the book gets. If a strong '08 XJ8 is in the book for $24,000, they want to pay $23,000. If it's in next book, for $23,000, they want to pay $22,000. Drop it to $22,000, they want to pay $21,000. And so on. Let's hope we donít get there this year.
In the meantime, we welcome the stability many segments of the market are experiencing and hope it continues through the holiday season.