Last updated Friday, August 12, 2005

I asked one of the more active dealers in the complex here at Teterboro,NJ, how he fared at the local auction this past Tuesday. His response was, “It’s summer.” I thought that pretty much summed it up. It is that time of year when there is neither very much inventory nor very much activity. It makes for a generally sluggish and somewhat unpredictable market. Unless you have a very unusual car, you must sell price in order to create any sort of interest among buyers.

I don’t see any reason for that to change in the near future. Whatever burst of activity was created among new vehicles with the most recent round of incentives has mostly passed, and with it the short-lived increase of wholesale inventory. We can expect that the record sales of the last 6 weeks will be followed, as usual, by very weak new vehicle sales as consumer demand slowly rebuilds. Trades should be scarce, but demand will be light. It is August, soon to be followed by September, and there are already signs that the market will steadily erode as we approach what is normally the low point of the market, October and November.

Convertibles and sport-coupes have held up pretty well thus far, but it appears that they may be in the first stages of a significant adjustment. Things like the BMW 3-series convertibles and Mercedes CLKs are clearly softening. The highline market in general has been dropping steadily for the past several months and we believe will continue to do so. It has really been one segment of the market that has not seen the usual upward spike that typically comes with the spring market. Because highlines have been steadily declining while most of the other market segments have not, they may not experience the drastic declines we have sometimes seen in the past.

Larger SUVs have also been declining steadily as heavy supply and gas prices have taken their toll. We expect that to continue for the next several weeks, although a lack of supply may soften that decline somewhat. Vehicles such as the Porsche Cayenne and Lexus LX470 have already taken some hard hits.

Because the rest of the market - the ordinary, bread-and butter vehicles - are relatively scarce, they seem to be dropping - but slowly - and we expect that trend to continue as well.

Dan Galves