Last updated Friday, November 12, 2010

Buyers More Disciplined
October went the way of most Octobers, a declining market across the board with few exceptions. There is still some demand around and there continues to be a relative scarcity of vehicles, but good ones are few and far between and the more ordinary ones are not being chased with the reckless abandon we have seen at times earlier this year. Buyers seem more disciplined about what they want to buy and what they are willing to pay and the market is definitely a reflection of that. Lots of vehicles without bidders or with 'price buyers' getting off vehicles early on. Auctioneers are earning their money.

Luxury Imports Still Leading Declines
High-end imports continue to lead the decline as they have for the past several months, with the higher priced models most vulnerable. BMW 6-series, Mercedes SLs and S-class cars, Audi A8s, Lexus LS models are examples. Even Porsche 911s, seemingly invulnerable much of the time, have declined with the rest of the market. As one would expect, convertibles of all kinds have been particularly hard hit.

Late model vehicles of all kinds have seen the biggest declines after the high-end imports. That too is to be expected as incentives are still quite strong on many new vehicles and supply, mostly fleet and program vehicles, is relatively high considering the low level of demand.

Good 'price range' vehicles of all kinds have been slowest to erode in this market. They are still scarce and get attention from buyers.

Auction Results Misleading
We think that at this time of year and in this sort of market one has to be very cautious about using auction transaction data. The transactions occurring are likely to be better vehicles sold by better sellers, whether institutional sellers or those elite sellers who have spent years developing best practices and really know there way around the auction scene. There is often a huge difference in what those sellers can get for a vehicle compared to the more typical consignment dealers and wholesalers. As always, the lack of useful "no-sale" data is a flaw in the data.

At the Bottom?
The good news is that we think we may be near the bottom of the market. Dealers' inventories are generally low and there is definitely reasonable demand for product and that should continue to be the case as we move into the holiday season. Good quality vehicles continue to be scarce and we expect they will continue to be sought after. We may even avoid that scary market when no matter how low the books seem to be everyone, never-the-less, wants to buy behind book anyway.

Dan Galves