Market Conditions June, 2003

The latter part of May, including Memorial Day weekend, seemed to bring some increased activity to the used vehicle market. It is a welcome relief to what has been an unusually tepid spring, probably the result of some strong retail sales during the holiday weekend that led to some re-stocking of inventory. We don’t expect it to last very long because the fundamental reasons for a relatively weak spring market - generally sluggish retail sales and an abundance of supply in most market categories - remain.

If this spring is like most, convertibles will begin to soften soon. Perhaps the fact that the weather has been so poor has put a damper on convertible and sport coupe sales in general and a return to a more normal spring/summer weather pattern will spur some sales and provide a late season boost to that segment of the market. But with rare exceptions there has not been the typical springtime feeding frenzy among sport coupes and convertibles and we would be cautious about the future of that segment.

June books will include 2003 pricing, and 1997 models will go into the older car and truck edition. In general, 2003 pricing is significantly lower than last-years introduction of current year pricing. The proliferation of rebates and incentives coupled with sluggish sales and large inventories of new vehicles has driven down the price of current year used vehicles. These conditions have also put downward pressure on 2002 pricing. The good news is that there are some relative bargains out there, especially in 2002 models, creating some good sales opportunities.

Though improved, the market is still picky and buyers are very selective about what they chase. The result is a very thin upper tier of strong sales, a larger segment of price driven sales, and a large number of no-sales.