Last updated May 2013

We had some fun recently declaring the official onset of a belated spring market. Just what defines a spring market is, of course, debatable. My particular sense of what constitutes such a market is that just about everything is hot and that losses are few and far between. I considered myself a pretty aggressive buyer when I was out on the road and felt that if I wasn’t losing money on one or two out of every ten vehicles I bought then I might be passing on some vehicles I shouldn’t. But a real spring market changed that ratio dramatically, maybe losing on one in every twenty or thirty vehicles. Frankly, in such a market it was hard to find a loser.

So we were surprised when we got the sense as we went about doing our job of evaluating vehicles that what we had so recently deemed to be a “spring market” seemed to be remarkably and atypically brief. Skeptical of what we were sensing, we reached out to several of our consultants who are particularly attuned to the market as they go about their businesses of buying and selling vehicles in the wholesale marketplace and the (somewhat surprising) consensus was that our assessment was correct, that the market had changed noticeably.

So we think, for the time being at least, the market has altered and that stable would be a more accurate description of what today’s market feels like. As in a typical spring market, there are clearly pockets of real strength. The right vehicle in almost any segment does remarkably well and exceptional vehicles often bring exceptional prices. Good vehicles bring good prices. But mediocre vehicles with mediocre miles are tepid at best and often go begging in the lanes. So it is a much more selective market than it was even a few weeks ago.

The European and Asian luxury segment that had been the one segment consistently eroding this year seems to have stabilized. It has been a while since we have seen that and that is an indication of relative strength in the market. Particularly strong have been convertibles in much of this segment. Mercedes CLK cabs and SLs, BMW 3 Series convertibles, Jaguar XKs, Porsche cabs and their ilk have strengthened significantly.

Domestic cars and SUVs, particularly mid-size and compacts, have firmed up as well and you will see some increases in the book reflecting that segment’s popularity. Pick-ups and full size SUVs are stable as are the mainstream imports, both cars and trucks. Healthy price range vehicles continue to be very strong. The emphasis is on healthy. Junk is junk and prices reflect that.

Late model mainstream vehicles, program vehicles, and rental returns seem to have weakened considerably. We would guess that demand for them is down and that pressure from new vehicle incentives has impacted that group negatively.

We expect the market to continue to be relatively stable through May, but with continuing weakness among mediocre vehicles with mediocre mileage. What June will bring remains to be seen. As we said, it seems to have been a particularly short spring market, but we expect some welcome stability to be with us for a while.

Dan Galves

Dan Galves