Market Conditions July 2004

Due to a general lack of product, the wholesale automobile market continues to hold firm in what is traditionally a month that sees some serious erosion of vehicle values. With some exceptions (late models and SUVs in particular) we expect that July will continue the trend of the last few months, favoring good cars with good miles in general, and those that can be retailed for $12,000 and under in particular.

What has been increasingly softening in the market is the larger SUVs, late models in particular. Gasoline prices, rebates and incentives on new vehicles, and high volumes of used entering the marketplace make them difficult to sell. We've said it a hundred times, but we'll say it again: when price (a low price) becomes the only incentive to buy a vehicle, it doesn't bode well for the seller. The book has dropped accordingly and probably will continue to do so for a time.

Convertibles and sport coupes are continuing a slow downward trend as one would expect at this time of year. Pick-ups and vans are holding steady as are most of the run-of-the-mill foreign and domestic sedans. Luxury European and Asian models are experiencing some erosion of prices, but nothing drastic. We expect that to continue as we approach August and September.

As long as we continue to experience a scarcity of good vehicles, we expect the market to soften, but to do so less abruptly and steeply than is typical for this time of year.

Dan Galves