Last updated August 12, 2008

There has been something of a positive shift, or at very least some stabilization, in certain of the more volatile used vehicle market segments in the last couple of weeks. As usually happens eventually in these type of unusual market conditions brought on by specific economic factors such as a spike in fuel prices or a tightening of restrictions among lenders, the shortening of supply and severely eroded market value of the hardest hit segments eventually find a level at which there is enough demand to create some competition in those segments that have gone begging for the past several months. Such seems to have happened among the hard hit full size SUV and pick-up segments in recent days. A lack of trade-ins, institutional selling, and consignment sales have curtailed the supply in these segments. At the same time, dealers and consumers have come to the conclusion that these vehicles have become so cheap compared to some other related market segments (mid-size and compact SUVs and pick-ups) that they have actually become more desirable as well as harder to find, conditions that eventually add strength to a weakened market.

So you will find some stabilization among these segments in our current editions and even some increases among certain of the vehicles. We consider that a positive and hope that it will bring some calm to what has been a highly confused market. As long as the supplies stay relatively low and the values continue to be sufficiently depressed versus the more fuel efficient competition, things should remain somewhat stable. The most likely threat to this welcome respite would be a significant spike in supply as it looks as if fuel prices are moderating a bit.

Fuel efficient vehicles continue to be inordinately strong. Certain hybrids that are in extremely short supply new (Toyota Prius and Honda Civic in particular) have spiked in value to what we think is an extreme (ridiculous??) degree, but such is the reality of the marketplace. Other fuel efficient vehicles in short supply new (Mini Coopers come to mind) are almost as strong, relatively speaking, as the hybrids. A 2006 Mini Cooper S is worth about the same as a comparable BMW 325 or a Mercedes C280, both of which cost at least as much as $10,000 more than the Mini when new. A base Mini of the same vintage is worth the same as a comparable Cadillac DTS, which cost about $20,000 more when new. Such is the craziness of the market we inhabit. Where applicable among the same models, 4-cylinders are worth as much or more than 6-cylinders, and 6-cylinders as much or more than 8-cylinders.

The rest of the market remains pretty stable for what is normally a slowly declining late summer market. Convertibles are eroding a bit more quickly in general and the European luxury segment continues to erode, especially among the more expensive and gas-guzzling models, but not as rapidly as in the recent past.

Dan Galves