Last updated Tuesday, Septmeber 18, 2012
More Expensive Models Falling Fastest
August brought a generalized dip in almost all segments of the used vehicle market. While not unexpected, it was perhaps more severe than anticipated in certain segments. Most heavily impacted was the European and Asian luxury segment, cars and trucks alike. In general, the more expensive models suffered the most dramatic erosion. Porsche products, sometimes appearing to be almost immune to depreciation, were at the front of the pack: Boxsters, 911s, Panameras, Cayennes...all of them. It's as if, all of a sudden everyone decided it was time for them to behave like the depreciating assets automobiles are supposed to be. Close behind in terms of softening were most of the higher end SUVs: Lexus LX570s, Mercedes GL-series and their ilk. The less expensive models, things like BMW 3-series and Mercedes C-series, were, on the other hand, only slightly impacted. Somewhere in-between were the convertibles and sport coupes, things like Z4s and SLKs. The rest of the segments, with rare exceptions, eroded steadily if not dramatically. As expected in August.
So what's ahead? Labor Day retail sales seem to have created a temporary buzz in the lanes. Activity was stronger this past week than it had been in August as dealers looked to replenish inventory. That may carry over for another week before late-September begins what is typically a slow but steady softening of the market as we move through the fall months. We expect that to happen and for the market perhaps to be even more stagnant than usual if people are hesitant to act until the upcoming elections are behind us. And then, of course, there is that "cliff" we're approaching about which I'm sure we'll be hearing much more post-election.
Gas Prices Creeping Up
And are people so preoccupied with the political scene that they aren't paying any attention to gasoline prices? We're fast approaching $4 gas and no one seems to care. Full size SUVs and pick-ups are still doing relatively well while econo-cars are holding their own at best. What's up with that? Are dealers and consumers getting used to these relatively temporary spikes in the price of fuel or are we just getting acclimated to the concept of $4 gas? We don't know, but it's very strange and something we think is worth keeping a close eye on.
I know this is repetitious, but cars and trucks with good equipment, good color, good condition, and good mileage continue to be scarce and continue to be strong. It's the ordinary vehicle with medium mileage that continues to be difficult and the cause of so many maddeningly one-sided conversations between the auctioneer and the lane.
August Declines Make For Gentler September?
So we expect the end of September to be much like most Septembers, a slowly eroding market. We keep hearing there is a scarcity of vehicles, but we don't see the recent market reflecting any strength that might imply except among the extraordinary vehicles. It does seem, however, that some of the sting has already been absorbed and that maybe this September will end up being a bit less painful than usual.