Market Conditions, Wednesday, August 6, 2003

Finally! For the first time in almost a year we have been experiencing a strong and consistent market that has breathed a bit of life into what has been a “blah” market for much too long a time. There is actually a demand for cars. Retail sales have been good if not great, and a short supply of vehicles has brought strength and stability to the market, and that’s the first time we have been able to say that in quite a while. We don’t see any reason why the circumstances creating these good conditions should change abruptly, and we expect the market to remain stable through the month of August. In most years you could expect to see some significant depression of pricing during the month of August, but we think this year will be an exception (why not? just about nothing about the market in 2003 has been normal thus far).

Of all the market segments, we would say that SUVs and pickups have shown the greatest strength. It seems that trucks are not going to go away any time soon. Just about everything has been very stable and bordering on strong. Sport coupes and convertibles are not what we would consider hot, but neither have they experienced the dives they often take this time of year.

Beware of 2003s. Manufacturers have placed some very strong incentives on them in anticipation of many 2004 models that are arriving soon. We think the book has done a good job of reflecting the relative weakness of the 2003 market, and the incentive blitz has done much to compress the price difference between “02 and “03 pricing. We are occasionally questioned about the sometimes small gap between current year and one year old models, and those strong incentives on new vehicles are the reason for that.

Along with the market being elevated, so is the mood of the buyers and sellers we see here in the complex and out at the auctions. You wouldn’t have do anything more than look at their faces to know that things were on the upswing.