I’m sure it is no surprise to most of our subscribers that this is a tricky market. We’ve been saying that for a while on galves.com, our Internet site that includes a regular feature concerning market conditions. We are saying it again in our centerfold because we think it needs to be emphasized. This is a very tricky market, and for all but the exceptional vehicles - by virtue of mileage or condition or both – caution should be the order of the day.

Exceptional vehicles are by their very nature relatively scarce and in short supply. Since retail used is really quite slow, dealers are being very selective as they re-stock their inventories. They are chasing only the best examples of whatever it is they usually sell. A vehicle that is only ordinary or less by virtue of its mileage or condition or both will quickly fall through the cracks into the lesser pool of vehicles that has only one asset to make it desirable, a low price: good if you’re buying, bad if you’re selling. What makes this market particularly unpredictable is the unusually large gap between the exceptional vs. run-of-the-mill vehicle. The difference, for instance, between the value of a 99 Sedan deVille with 33,000 miles and one with 43,000 might normally be $1500 or less, but in this market it might realistically be as much as $2500. And you will have a lot more interest in the lower mileage vehicle even with the $2500 price difference. Even the least mileage sensitive vehicles, Hondas and Toyotas for instance, are feeling the effects of the general lack of demand and are experiencing more than the usual penalty for excessive mileage.

In a highly selective market such as this, condition issues follow the same pattern as mileage issues. Flaws that might be ignored when there is a supply shortage are enough to cause a buyer to lose interest in a vehicle in today’s market. Price becomes the only incentive to attract a buyer to such a vehicle, putting the seller in the awkward position of selling to a reluctant audience. Conversely, unusual equipment – navigation or diesel engine, for example - may move a vehicle from the ranks of the ordinary into the desirable category and significantly affect its value. In a market such as this both the positives and the negatives are emphasized.

Because we price from a trade-in perspective we are sometimes perceived as being low with respect to other price-points in the market. We don’t think reality supports that view of our pricing if mileage, equipment, and condition are taken into account. In fact, we are perceived as being high about as often as being low, a position that probably reflects the validity of our pricing. It all depends on whether you are buying or selling. We would agree that in some hot markets you can afford to be somewhat lax regarding mileage, equipment, and condition and get away with it. In a market such as this, you can pay dearly for such an attitude. We are suggesting that full mileage deductions may be warranted and that condition and equipment adjustments might well be more severe than normal.

In short, be careful out there.