Market Conditions August 2002

How quickly we forget. So many of the dealers I’ve run into recently are complaining about the extremely slow pace of wholesale and retail sales this month. Often I remind them that it is August, after all, and you see a kind of calm resolution come over them as they recall all those Augusts they’ve suffered through in the past. It doesn’t put any money in your pocket, but somehow putting things in perspective is comforting. I always say there are two great times to take a vacation in this business, August and December.

But the truth is, as Augusts go this is an especially dull one. It reminds me of those winter months when no matter how low a car is in the book, no matter how much common sense tells you it should be worth it, everyone wants to buy everything under the book. And it makes sense. If it’s like pulling teeth to get anyone to pay over the book, you’d better own it for under the book.

I said it reminds me of those months, but in reality it is not that bad. Really good vehicles are still bringing good money. Lower mileage vehicles are still a big attraction. You can generate interest in almost anything if it has a good clock. Color is more critical than normal, as is having the right equipment. We’ve said it before, but it bears saying again: the spread between an exceptional vehicle and an ordinary one is much greater than normal because of the low demand for inventory. If it isn’t special, it better be cheap.

In general, 2002 and 2001 vehicles are risky business. No doubt the special financing and/or rebates that are so abundant are making it difficult for a late model used vehicle to work for the customer. Year 2000 and down vehicles are holding up better There are some really good buys among those 1999 vehicles coming off lease in large quantities (as long as you’re not looking for that special one). 1998 and older vehicles are relatively scarce and in a favorable price range and are doing well if they have some health.

Of course you need to be careful handling any of the convertibles and sport coupes this time of year. The only thing driving them right now is a low price, but I wouldn’t want to be re-wholesaling one 60 days from now.