Market Conditions August 2004
There has been very little change in the wholesale automotive market in the past month. The market continues to be unusually strong
for the months of July and August, months which usually see the beginning of a generally declining market that stretches into December. We
are still experiencing the shortage of vehicles that is responsible for the relative strength of the market and don't see any reason for that
to change in the short term.
What are not scarce are SUVs, and that and the high cost of gasoline has created a falling market for that segment. The bigger, thirsty,
and most plentiful of the SUVs (Tahoe, Suburban, Navigator types) have suffered the most. Smaller more efficient SUVs may have even become
more desirable in the market as consumers trade some space for better gas mileage.
Vehicles that get exceptional mileage, hybrids and diesels, continue to gain strength and have been going up in the book along with gas prices.
Sport coupes and convertibles have been weakening and will continue to do so. Because of their relative scarcity, however, the pace of their
falling values has not been as dramatic as in the past.
Late models continue to be risky business in the face of the many generous incentives offered by manufacturers.
We expect the market to erode more slowly than usual this time of year due to the lack of supply, but we advise caution over
the next couple of months because when it does react to the general downturn we normally get during these months, it may fall hard and fast.